Bitcoin surpassed $65,000: analysis of key growth factors and hidden risks
This week, Bitcoin once again firmly held above the $65,000 mark, showing a weekly gain of 5.2%. However, behind the outwardly optimistic picture lies a complex and ambiguous dynamic of institutional demand that requires close analysis.
The key driver of growth was geopolitical expectations—signals of a possible resumption of negotiations between the US and Iran. This temporarily lowered the level of "fear" in the market and triggered a wave of buying. Yet, fundamental indicators, particularly flows into spot Bitcoin ETFs, paint a less rosy picture.
Over the past week, US spot Bitcoin funds attracted $197.4 million. This marks the second consecutive week of positive results, which is certainly a positive signal. But the scale of recovery remains extremely modest. Over two weeks, only $273.1 million has been recovered—just 3.3% of the massive $8.2 billion that investors withdrew over the previous two months. June was the worst month in ETF history, with outflows of $4.5 billion, with nearly 79% of that amount attributed to BlackRock's iShares Bitcoin Trust (IBIT).
The overall dynamics of assets under management (AUM) for the funds also confirm persistent weakness. Currently, ETFs manage about $77 billion, compared to $104 billion in mid-May. Even within a positive week, extreme unevenness was observed: Monday saw the largest single-day outflow since June 26, amounting to $424.7 million, which was only partially offset by inflows in subsequent days.
Golden Scenario or Zero Forecast?
Bloomberg Intelligence senior analyst Eric Balchunas draws parallels between the current phase of Bitcoin ETFs and the history of the gold fund GLD. In 2011, GLD became the world's largest ETF, after which its assets collapsed from $76 billion to $22 billion. Recovery took years but ultimately led to new all-time highs—GLD now manages nearly $190 billion. Balchunas believes IBIT may follow this scenario: rapid growth, a painful drawdown, and a prolonged recovery requiring patience.
However, Citigroup holds a diametrically opposite view. The bank lowered its 12-month Bitcoin target from $112,000 to $82,000—this is the second reduction this year, which started with a forecast of $143,000. Moreover, Citi predicts zero net inflows into ETFs over the next year, citing sluggish US crypto regulation and weak institutional demand. BlackRock CEO Larry Fink disagrees with this assessment, stating that the sell-off phase has already ended.
My analysis: The current Bitcoin rise above $65,000 is more of a tactical bounce on geopolitical news rather than the start of a sustained bullish trend. Weak ETF flows and pessimistic Citi forecasts indicate that the market has not yet passed the "capitulation" point for institutional investors. As long as bond markets price in a new risk of a Fed rate hike, Bitcoin will struggle to form a long-term upward momentum. Investors should prepare for an extended period of consolidation rather than a rapid rally.