Bitcoin Recovery to $70,000: Institutional Inflows Halt Sell-Off – But Uncertainty Remains

Institutional Return Signals Possible Trend Reversal – But the Bears Are Not Yet Defeated

After one of the most severe corrections since the FTX collapse in November 2022, the Bitcoin market is showing its first signs of life. With inflows of $145 million into U.S. spot Bitcoin ETFs on Monday, a tentative recovery continues that already began on Friday with $371 million in new investments ^[2]. Bitcoin is currently consolidating around the $70,000 mark, while the sentiment indicator stands at 10 points, still signaling "extreme fear" ^[3]. The central question: Is this the beginning of a sustainable recovery or just a brief pause before the next downward wave?

The answer could have far-reaching consequences for further market development. In parallel with the institutional return, critical voices are multiplying, speaking of a fundamental change in Bitcoin market dynamics – and even declaring the end of the bull market.

The Facts

The recent ETF inflows mark a potential turning point after weeks of outflows. Overall, Bitcoin ETFs have still recorded net outflows of $1.9 billion this year ^[2]. However, the dynamics appear to be changing: "Outflows slowed significantly to $187 million despite strong price pressure, with the slowdown historically signaling a potential turning point," explains James Butterfill, Head of Research at CoinShares ^[2].

The recovery is not limited to Bitcoin. Altcoin ETFs also recorded gains on Monday, with Ether inflows of $57 million and XRP inflows of $6.3 million ^[2]. Ethereum recovered to a level of around $2,000 ^[3].

However, while institutional fund flows raise hopes, traders urge caution. The recent crash was triggered by a "cocktail of events": capital flows into AI investments, corrections in tech stocks, fears about quantum computers, liquidity withdrawal through the yen carry trade, geopolitical tensions in the Middle East, and overleveraged Treasury models ^[3]. Additionally, there is a circulating theory that a large hedge fund from Hong Kong may have gotten into trouble with complex derivative strategies, triggering forced liquidations across various markets ^[3].

The macroeconomic framework remains challenging. The nomination of Kevin Warsh as a possible new head of the U.S. Federal Reserve is being interpreted by markets as a signal for a longer-lasting tight monetary policy. Interest rate cuts are considered unlikely for the time being, keeping the environment for risk assets tense ^[3]. In the short term, the current recovery could merely serve to squeeze out remaining short positions above $72,000 before another pullback toward $50,000 occurs ^[3].

Amidst this uncertainty, Bitcoin critic Peter Schiff is voicing a grim forecast. The U.S. economist and gold advocate claims that Bitcoin may have seen its last all-time high at $126,000 ^[1]. His reasoning: Bitcoin fell below its 2021 all-time high during the crypto crash – something that has "never happened in its 16-year history" ^[1]. That this occurred despite "unprecedented support from the media, Wall Street, and the government" is interpreted by Schiff as evidence of the final end of the bull market ^[1].

However, not everyone shares Schiff's pessimism. Matt Hougan, Chief Investment Officer at Bitwise, emphasizes that the growing institutional presence has not driven early Bitcoin investors out of the market ^[2]. Many early investors are merely taking partial profits after significant gains, rather than exiting completely. "They invested a few thousand dollars and ended up with millions," Hougan explains. "The vast majority are still in, and they are being supplemented by new institutional investors" ^[2].

Analysts at research firm Bernstein described the recent downturn as the "weakest bear scenario" in Bitcoin history, as the typical industry collapses normally associated with deeper crypto market crises were absent ^[2]. Some market observers still expect a drop to between $40,000 and $50,000, which would represent 80 percent from the all-time high – typical for bear markets ^[3].

Analysis & Context

Current developments reveal a fundamental tension in the Bitcoin market: On one hand, ETF inflows indicate a stabilization of institutional demand, while on the other hand, macroeconomic and technical conditions remain fragile. History teaches us that such recoveries after massive corrections often occur in multiple stages – with false glimmers of hope that result in further sell-offs.

Particularly noteworthy is the discrepancy between Peter Schiff's pessimistic forecast and the actual long-term performance. While Schiff has been prophesying Bitcoin's demise for years and recommending gold, a ten-year comparison shows a clear picture: gold achieved a return of 380 percent, Bitcoin nearly 4,000 percent ^[1]. Schiff's argument that Bitcoin has fallen below a previous all-time high for the first time also ignores the changed market conditions – institutional adoption, ETFs, and macroeconomic factors play a completely different role today than in earlier cycles.

Bitwise's observation that early Bitcoin holders remain in the market despite institutional competition is a bullish signal. It suggests that the fundamental conviction in the Bitcoin narrative remains intact, even if short-term volatility causes uncertainty. Partial profit-taking is a natural process in a maturing market and should not be misinterpreted as capitulation.

For investors, the current phase means heightened vigilance. The technical situation remains damaged as long as Bitcoin does not sustainably reclaim levels above $80,000. The $70,000 mark currently functions as critical support – a break could indeed pave the way toward $50,000 or lower. At the same time, such corrections historically often offer attractive entry opportunities for long-term oriented investors, provided the fundamental Bitcoin narrative – limited supply, decentralized nature, store of value – remains intact.

Conclusion

• The return of institutional fund inflows into Bitcoin ETFs after weeks of outflows could mark a turning point, but the year-to-date balance remains negative with $1.9 billion in net outflows – a sustainable trend reversal has yet to be confirmed

• Peter Schiff's forecast of a final all-time high at $126,000 ignores Bitcoin's long-term outperformance versus gold and the fundamentally changed market conditions through institutional adoption – his historical track record also speaks against him

• The technical situation remains fragile: As long as Bitcoin does not sustainably return above $80,000, the risk of further pullbacks toward $50,000 persists, especially in the context of tight monetary policy and tense macroeconomic conditions

• The fact that early Bitcoin holders remain invested despite institutional competition and are merely taking partial profits indicates intact fundamental conviction – a bullish long-term signal despite short-term volatility

• Historically, corrections of this magnitude often offer attractive entry opportunities for long-term oriented investors, provided the fundamental Bitcoin narrative remains intact – the absence of typical industry collapses like FTX supports this thesis