Short Squeeze Lifts Crypto as ETF Outflows Signal Weak Demand

Liquidation heatmaps also showed leverage concentrated in the largest assets. Bitcoin accounted for about $92.33 million in liquidations over 24 hours. Ethereum accounted for about $30.03 million. Such clustering means index-like moves in BTC and ETH can still dictate volatility across the broader market, as smaller tokens often react as a second-order effect.

Despite the price bounce, overall activity showed signs of consolidation rather than overheating. Total crypto market capitalization stood near $2.1887 trillion. Twenty-four-hour spot trading volume was around $65.4 billion, upward price action without a commensurate volume spike. Derivatives trading volume fell 15.48% day over day to roughly $609 billion. The move may have been driven more by forced closing of existing short exposure than a wave of new leveraged longs.

On-chain-adjacent activity also cooled. DeFi volume declined 12.24% to about $8.48 billion. Stablecoin volume dipped 1.71% to roughly $68.15 billion. Those figures suggest that liquidity inflow and risk-on deployment were not yet meaningfully accelerating, tempering the bullish read-through from prices alone.

ETF flows sent a cautionary signal. For July 9 (U.S. time), U.S. spot Bitcoin ETFs recorded net outflows of about $95.3 million. Spot Ethereum ETFs saw roughly $52.08 million leave. The divergence, prices up and ETFs down, indicates institutional allocators may have been de-risking or taking profits into strength rather than chasing the rebound. It complicates the narrative of a clean trend reversal.

Still, Ethereum saw a separate pocket of demand from a large buyer. A wallet suspected to be linked to Bitmine reportedly purchased an additional 20,500 ETH from Galaxy Digital, a transaction valued at approximately $35.92 million. Such targeted accumulation can offset broader fund-flow weakness on the margin. It also makes near-term supply-and-demand signals more idiosyncratic and harder to generalize across the market.

In options markets, expiring contracts added another variable for short-term volatility. As of 16:00 KST (03:00 ET) on Thursday, about $1.907 billion worth of Bitcoin and Ethereum options were set to expire. The estimated max pain levels were cited near $62,000 for BTC and $1,700 for ETH, below prevailing spot prices. That raises the odds of choppier price action around settlement as hedges are adjusted.

Regulatory and policy developments also continued to pull crypto market structure into mainstream oversight. Prediction market Polymarket has initiated a U.S. regulatory approval process aimed at offering margin trading. Hyperliquid and Phantom submitted comments to the U.S. Commodity Futures Trading Commission advocating for updates to rules governing on-chain trading infrastructure. The push signals a growing effort by crypto-native platforms to shape how the boundary between DeFi and derivatives is defined under U.S. regulation.

Longer-term accumulation trends remained intact at the corporate level. Public companies collectively bought roughly 110,000 BTC in the second quarter of 2026. Reported holdings now exceed 1.26 million BTC, over 6% of total supply. That structural absorption can tighten circulating availability over time, even if it does not prevent sharper, leverage-driven swings in the short run.

Thursday’s move looked less like a decisive momentum breakout and more like a positioning event. A rapid unwinding of bearish leverage lifted prices while ETFs bled and volumes softened. With outflows, subdued activity indicators, and options-expiry mechanics still in play, the rally’s durability will likely depend on whether spot demand and sustained institutional demand emerge after the forced buying fades.