Three forces have been driving Bitcoin (BTC +5.45%) higher since early August: exchange-traded fund (ETF) inflows, high inflation pushing investors to buy scarce assets, and on-chain signals flashing values that are consistent with their historical lows.
Can those drivers continue to boost Bitcoin's price, or are they about to peter out?
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Spot ETFs took in $3.8 billion in three weeks, then handed some back
Bitcoin's moves upward don't occur in a perfect march; it tends to follow a pattern more like two steps forward and then one step back.
On that note, even after helping to spark the recent uptrend, spot Bitcoin ETFs posted $462.7 million in net outflows during the week ending Sept. 11, breaking a three-week net buying streak, perhaps due to fears that the Federal Reserve was going to hike interest rates in the following week. (Which, of course, it did.)
CRYPTO: BTC
Key Data Points
The mechanism here is that the issuers of Bitcoin ETFs need to buy coins to back their ETF shares. U.S.-based ETFs absorbed about $3.8 billion in net inflows over the three weeks through Sept. 4, per SoSoValue data, including $730.8 million in inflows on Sept. 3 alone. However, those inflows can quickly turn to outflows if sentiment shifts. On Sept. 15, the day before the Federal Reserve's announcement of a 25-basis-point federal funds rate hike, there were $450.4 million in net outflows.
Inflation is the second force driving demand for Bitcoin, and it's substantially stickier and longer-lasting than the ETF flows are. Most likely, at least some of the ETF inflows are actually being driven by investors seeking inflation-resistant assets due to fears of monetary debasement.
That fear is fully understandable, as the Bureau of Labor Statistics reported on Sept. 11 that consumer prices rose 3.4% year over year in August. That was just the latest information suggesting that the U.S. dollar is continuing to lose purchasing power at an accelerated pace compared to before 2020. Investors expecting that pace to continue are logically moving their money into fixed-supply assets, and Bitcoin is one of the largest ones other than gold.
On-chain indicators are near the lows
The third force that's supporting higher Bitcoin prices is on-chain data on miner stress and capitulation, the point at which the pool of willing sellers is largely spent.
In a research report, the asset manager VanEck found that eight of 12 holder capitulation signals were flashing as of Aug. 12; those signals include factors like average holding periods and liquidation rates of supply that hasn't moved in multiple years. One of those other indicators, mining difficulty, was 18.3% beneath its November 2025 peak.
A decline that steep suggests that unprofitable miners decided to stop mining, and also that they likely sold some or most of their coins to cover their underwater costs. That squeeze is already easing. VanEck reported that the Aug. 8 adjustment raised difficulty by 1%, the first upward print of the sequence. Passing that turning point has historically led to the coin's price running higher for many months.
Eventually, those indicators will lift out of their capitulation range. That shift would mark the distress ending rather than the rally, and inflation fears could keep supporting the price well after it happens.
In other words, expect this rally to continue for now.
