Bitcoin ETF Flows Are Providing SupportAlso This Drawdown Is Likely A Long Process & The Bond Market Is Pricing In Higher Rates
Welcome to Ecoinometrics’ Friday edition. Each week, we analyze the three most critical market signals impacting Bitcoin and macro assets, delivering institutional-grade insights through data-driven charts and analysis. Today we’ll cover:
Taken together, these signals highlight where Bitcoin stands today: demand is returning, but the broader environment remains a constraint. Let’s take a look at the data. In case you missed it, here are the other topics we covered this week:
Get these professional-grade insights delivered to your inbox: Bitcoin ETF Flows Are Providing SupportBitcoin is not breaking out yet and if anything it is ending up the week on a bit of weakness. But the important thing is that demand continues to improve in a meaningful way. On a 30-day rolling basis, ETF flows have moved up to around 35K BTC. That’s the highest level since November and a clear shift from the sustained outflows we saw most of the year. Flows at these levels start to have a real positive impact on returns. When ETF demand is firmly positive and trending higher, it provides a base of support for Bitcoin’s price. And that’s what we’re seeing now. If flows continue to build toward the 50K BTC range, our flows-to-returns model points to a higher probability of a sustained uptrend compared to the simple stabilization regime we are in now. Over the past four years that has been the threshold where demand significantly outstrips supply. So far in March, the trajectory of flows is tracking close to the high range of the upside demand scenario we outlined at the start of the month. But at the same time, price is not following through. Bitcoin remains well below the range implied by that scenario, which was roughly $72K to $87K based on our simulations. The reason sits outside of crypto. Market conditions have tightened and that is limiting how much of this demand translates into price. But the read is straightforward. Demand is back and it is supporting the market. What’s missing is the broader environment needed for that demand to fully express itself in price.
This Drawdown Is Likely To Be A Long ProcessNow, even if demand holds up from here and market uncertainties are lifted, a fast recovery remains unlikely. In most market cycles, sharp recoveries don’t happen in isolation. They usually require a clear shift in the macro environment, often they require a boost coming from a shift in monetary policy. Right now, none of this in place. So there is no reason to expect an accelerated process. And without an accelerated process, progress can take a while to materialize. As you can see on the chart below, there is a consistent relationship between how deep a drawdown gets and how long it takes to fully resolve. The deeper the decline, the longer the recovery phase. Each point is a Bitcoin drawdown since 2014. And across three cycles the regression line is clear: for every additional 10% of drawdown depth, the total duration tends to increase by roughly 80 days. Based on the current drawdown, this implies a total duration of around 300 days. We’re only about halfway through that process. This doesn’t mean the path is linear. Bitcoin can rally, consolidate, and retrace multiple times along the way. But this historical pattern does provide a useful anchor for the timeline. Large drawdowns take time to recover even after structural conditions start to improve.
The Bond Market Is Pricing In Higher RatesLast week, we pointed out that Jerome Powell’s press conference leaned more hawkish than expected, with a renewed focus on inflation. When you add that the war in Iran and its effect on energy prices, it is no surprise that the bond market is starting to reflect serious worries about the risk to see higher rates. One of the most useful indicators for this is the 2-year U.S. Treasury yield. It captures pretty well where investors expect the Fed Funds rate to go in the near future. For most of the past year, that signal had been relatively stable, with the market leaning toward a pause or a gradual move lower in rates. That has changed. The 2-year yield has now moved above the current Fed Funds rate. That means the market is no longer pricing cuts as the base case. It is starting to price in the possibility of further tightening. In other words, inflation risk is no longer seen as under control. That might have consequences for Bitcoin. Higher rate expectations tighten financial conditions and make it harder for risk assets to move higher. That might lead to demand disappearing again. At least for now those worries are putting the brakes on a recovery. If we really get the Federal Reserve talking about rate hikes, that would even threaten this stabilization regime.
Tactical TakeawayThe setup is moving in the right direction, but too many factors are still holding Bitcoin back. Inflows are back and they are supporting the market. But that support can be offset if the macro environment tightens again, especially if the Fed leans more hawkish. So while it’s reasonable to think the bottom may be behind us given the return of demand, the risk of further downside has increased since last week. What would change the picture is straightforward. You’d want to see flows continue to build and stay positive, and you’d want rate expectations to stop drifting higher. Until then, Bitcoin’s path is likely to remain uneven. That’s it for today. Thanks for reading. Cheers, Nick P.S. Every week, our team conducts extensive research analyzing market data, tracking emerging trends, and creating professional-grade charts and analysis. Our mission: Deliver actionable macro and Bitcoin insights that help institutional investors and financial advisors make better-informed decisions. Ready for institutional-grade research that puts you ahead of the market? Click below to access our premium insights. You're currently a free subscriber to Ecoinometrics. For the full experience, upgrade your subscription.
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Friday, March 27, 2026
Bitcoin ETF Flows Are Providing Support
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