Cryptocurrency investment products halted a streak of outflows totaling $8 billion as Bitcoin sentiment rebounded due to weaker inflation in the United States

Cryptocurrency investment products concluded a streak of record outflows totaling $8 billion that lasted eight weeks, as easing inflation in the United States boosted investor sentiment.

CoinShares’ James Butterfill said that any sustained move above $80,000 for Bitcoin would require a major shift in expectations for monetary policy.

Glassnode said the lowest put-to-call ratio for Bitcoin in six months indicates that traders are scaling back bearish hedges and rebuilding positive exposure.

James Butterfill, head of research at CoinShares, wrote in a report issued on Friday that global crypto investment products are on track to record a second consecutive week of inflows after ending a run of net outflows totaling about $8 billion.

Inflation data influences consumers’ attitudes toward digital asset products

The firm said that weaker-than-expected US inflation data boosted investor sentiment and strengthened expectations of a Federal Reserve rate cut.

Global crypto funds recorded inflows of $287 million last week, and are expected to end this week with positive flows after having started with outflows. The average total inflows into Bitcoin exchange-traded funds in the United States between Tuesday and Thursday were $368 million, according to SoSoValue data.

This shift came after the release of US inflation data on Tuesday and Wednesday. Both the Consumer Price Index (CPI) and the Producer Price Index (PPI) for June came in below expectations, prompting markets to scale back their expectations for further monetary tightening.

It may be that the minimum level for Bitcoin has started to form, but the potential gains are still limited.

Despite the improvement in sentiment, CoinShares warned that Bitcoin’s upside may remain limited without a more serious shift in monetary policy.

The report said: "We expect trading within a defined range, with a chance that it will not exceed the $80,000 level, in the absence of a meaningful shift in expectations for monetary policy."

Butterfill said Bitcoin may be on the verge of reaching its market low after its recent recovery, but expectations of an imminent rate cut by the Federal Reserve are still premature. He explained that market participation typically increases as Bitcoin approaches new all-time highs, but remains relatively weak at current price levels.

Butterfill added: "The prevailing picture is that the current situation is driving interest in adding positions, but caution prevails while sentiment remains generally negative."

Options market indicators point to improving sentiment

In the options market, data from Glassnode also indicates that sentiment has become more positive. The company noted that Bitcoin’s implied volatility has fallen as prices have recovered.

The slowdown suggests that a large portion of the fear premium that built up during the heavy selling in June has started to fade, although uncertainty has not disappeared completely.

At the same time, the put-to-call ratio for Bitcoin options fell to its lowest level in six months, suggesting that traders are reducing downside protection as they increase exposure to potential price gains.

Glassnode wrote in an X post: "With the price stabilizing around $64,000, it seems traders are reducing bearish hedges and rebuilding positive exposure—a constructive shift in sentiment."

Bitcoin is trading at $63,900, down 0.1% over the past 24 hours at the time of writing this report.