Bitcoin Reclaims Ground as ETF Money Returns, but Galaxy's Bull Case Comes With Strings

Bitcoin is nursing a modest recovery ahead of the Federal Reserve's rate decision, drawing fresh capital into US spot Bitcoin ETFs for a second straight trading day. The renewed inflows have taken some of the sting out of last week's heavy redemptions — yet the broader picture for October remains negative, and a durable turnaround is anything but assured.

Roughly $176 million flowed into the funds yesterday, according to media reports, which together with Monday's $110.3 million puts the two-day total at about $286 million. That has trimmed October's net outflows to around $26 million. The buying was narrowly concentrated, though: only BlackRock's IBIT and Fidelity's FBTC reported inflows on the day, a sign that demand has yet to broaden across the fund universe.

The scale of what needs to be recouped is considerable. Investors pulled almost $774 million from the ETFs on Thursday and Friday of last week — $773.5 million, to be precise — so the recent inflows have offset only part of that exodus. Bitcoin changed hands at $81,427.00 at the time of writing, clawing back ground before the Fed announcement.

A Bull Market That Ended in June?

Set against this short-term flux is a far more constructive longer-term call. Alex Thorn, head of research at Galaxy Digital, believes the bear market bottomed in June and that Bitcoin has since entered an accumulation phase of the kind that has preceded previous rallies. In a Monday analysis, Galaxy put a return to at least $125,000 on the table — a scenario from the research house, not a guaranteed price path.

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The thesis rests on Bitcoin's recovery above its long-term weekly moving average and on demand from exchange-traded funds. Since the June low, US spot Bitcoin ETFs have absorbed 87,000 Bitcoin, according to Galaxy. Over the same stretch, net long positioning by asset managers in CME Bitcoin futures fell 57% from the week of the record high — the firm's way of contrasting firm spot demand with a markedly lighter derivatives book.

Galaxy's optimism carries an explicit caveat. A weekly close below $76,540 without a recovery within a month would call the thesis into question, and shrinking holdings at the US Bitcoin ETFs would likewise flash a warning.

Overhead Supply and the Retail Question

Between the current price and Galaxy's target sits a potential obstacle. Bitfinex estimates that about 874,000 Bitcoin were accumulated in a purchase zone between $81,000 and $82,500. Should prices revisit that band, some holders could opt to sell at break-even. The estimate maps the distribution of earlier purchases rather than confirmed sell orders, so it is no proof of imminent selling — but it does mean additional spot demand would need to absorb that potential supply for any rally to hold.

Retail activity offers little comfort either. According to CryptoQuant, small investors' Bitcoin deposits on Binance have nearly doubled within 30 days, reaching $10.8 billion, while deposits from large holders fell to $3.8 billion. Analyst Darkfost reads the shift as possible selling pressure from smaller players. Rising ETF inflows and heavier retail deposits on a single exchange can occur side by side — which argues against any blanket all-clear for the market.

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The Fed and the December Question

Monetary policy supplies the next test. Reuters reports that the Fed is expected to leave its benchmark range at 3.75–4.00% today, following a 0.25 percentage-point hike in September. A pause is the consensus, so attention will center on the guidance for further moves. NPR reports that investors expect a rate increase in December despite the anticipated hold, while CNBC notes that Fed Chair Kevin Warsh could signal additional tightening — meaning a pause would not automatically amount to relief for Bitcoin.

For investors, the distinction that matters is between a short-lived bounce and a genuine recovery. Further fund purchases could soak up potential sell orders, but the inflows so far do not prove that institutional buyers have returned in force. Galaxy's constructive scenario, meanwhile, depends on sustained accumulation rather than a two-day flurry. Bitcoin must first digest the rate outlook; only then does the question of durable demand — across more than a couple of funds — come into focus.

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