Three consecutive quarters in the red, record withdrawals from spot Bitcoin exchange-traded funds and capital rotating towards artificial intelligence stocks — this is how the first half of 2026 has unfolded for the world’s largest cryptocurrency. Bitcoin is losing the support of institutional investors just as the Federal Reserve adopts a more hawkish tone and markets brace for the US inflation report scheduled for July 14.
Bitcoin remains near $64,000 as markets await US inflation data
Key market figures
- Bitcoin price, July 9–11, 2026:
Approximately $64,200, within a narrow range of $63,800–$64,200 - Bitcoin performance in Q2 2026:
Approximately -14%, marking the third consecutive quarterly decline - Bitcoin ETF flows in Q2 2026:
Approximately $5 billion in net outflows, the largest quarterly withdrawal since the products were launched - Decline from the October 2025 peak:
Approximately 49%, compared with an all-time high of around $126,300
Bitcoin records its third consecutive quarterly decline
Bitcoin ended the second quarter of 2026 with a loss of approximately 14%, extending its negative run to three consecutive quarters. This is the longest sequence of quarterly declines since the cryptocurrency bear market of 2022.
June was particularly difficult. Bitcoin fell by around 19–20% during the month, breaking with its historically positive seasonal pattern. Bitcoin’s average June return has previously been estimated at approximately 5.9%.
May produced a smaller but still negative return of 3.6%. April was the only month of the quarter in which Bitcoin outperformed its historical median return.
The pressure on Bitcoin has coincided with broader concerns about liquidity across financial markets. In the approximately $2 trillion private-credit market, investors submitted redemption requests worth $15.6 billion, exceeding standard quarterly withdrawal limits at most business development company funds.
At the same time, capital leaving Bitcoin and other alternative assets appears to be moving towards artificial intelligence companies, semiconductor stocks and high-profile stock-market listings, including the widely anticipated SpaceX initial public offering.
Federal Reserve surprises markets with a hawkish shift
Minutes from the Federal Open Market Committee meeting held on June 16–17 were released on July 8, revealing an unexpectedly hawkish change in the Federal Reserve’s outlook.
Instead of the interest-rate cuts previously anticipated by markets, nine of the committee’s 18 members now expect at least one rate increase in 2026. The median projection reportedly shifted from a rate cut to a 25-basis-point increase.
The change was attributed to persistent inflation, a resilient labour market and continued economic growth.
Interest-rate futures quickly adjusted to the new scenario. By July 9, markets were no longer pricing in any probability of a rate cut at the Fed’s July 29 meeting. Instead, futures indicated a 74.9% probability that rates would remain unchanged and a 25.1% probability of a quarter-point increase.
A New York Federal Reserve survey published on July 8 also showed that consumers’ one-year inflation expectations had risen to 3.7%, their highest level since September 2023.
Analysts remain divided over the outlook. Some, including Joseph Purtell of Neuberger Berman, argue that markets may be assigning too much probability to an imminent rate increase. Others believe that continuing inflationary pressure leaves the Federal Reserve with limited room to ease monetary policy.
For Bitcoin and other risk-sensitive assets, the prospect of higher interest rates is generally unfavourable. Elevated yields increase the relative attractiveness of cash and fixed-income instruments while reducing investors’ appetite for volatile assets without predictable income streams.
Institutional investors withdraw money from Bitcoin ETFs
The clearest sign of weakening institutional demand can be found in the market for spot Bitcoin ETFs.
The funds attracted approximately $2.44 billion in new capital during April. However, the direction of flows changed rapidly in the following two months. May brought net withdrawals, while June recorded the largest monthly net outflow since spot Bitcoin ETFs began trading in the United States in January 2024.
BlackRock’s iShares Bitcoin Trust, known by its ticker IBIT, reportedly experienced the largest withdrawals, followed by Fidelity’s Wise Origin Bitcoin Fund, or FBTC.
The outflows suggest that institutional investors are becoming more cautious after playing a major role in Bitcoin’s earlier rally. They also point to a broader rotation away from alternative stores of value and towards companies expected to benefit directly from the artificial intelligence investment boom.
Since April, an estimated $12 billion has been withdrawn from gold and Bitcoin ETFs combined. Over the same period, semiconductor-focused ETFs reportedly attracted approximately $20 billion.
Veteran investor Jeremy Grantham has also renewed his criticism of Bitcoin, describing it as a speculative instrument without underlying fundamental value. In his view, the cryptocurrency may gradually lose relevance over the coming decades.
Although such assessments remain controversial, they coincide with evidence that investors are redirecting capital towards assets connected with earnings growth, technological investment and artificial intelligence infrastructure.
What the technical indicators show
On the three-day chart, Bitcoin appears to be forming a head-and-shoulders pattern. Technical analysts often interpret this formation as a potential warning of further price declines, particularly when the price approaches the pattern’s lower support line, known as the neckline.
Open interest in Bitcoin futures has fallen from approximately $31.3 billion at its May 30 peak to around $21.6 billion. The decline indicates that fewer leveraged positions are currently open in the derivatives market.
Lower open interest may reduce the risk of a sudden cascade of forced liquidations, particularly when compared with conditions observed in May. However, it also reflects weaker speculative activity and lower market participation.
Bitcoin’s funding rate remains slightly positive at approximately 0.003%, suggesting that long positions continue to hold a modest advantage over short positions. The reading is not high enough, however, to indicate excessive bullish leverage.
The weekly relative strength index ended June slightly above 40. This brings the indicator close to levels recorded during the 2022 bear market. Some analysts interpret the reading as evidence that selling pressure may be approaching exhaustion. Others note that an RSI above 40 does not yet provide a clear oversold signal or confirmation of a market reversal.
July 14 could determine Bitcoin’s next major move
Investors are now waiting for the US consumer price index report for June, scheduled for publication on July 14.
The data may determine how the Federal Reserve approaches its July 29 policy meeting. A higher-than-expected inflation reading would strengthen the argument for keeping interest rates elevated or potentially raising them further. Such an outcome could put additional pressure on Bitcoin and other risk assets.
A weaker inflation report could reduce expectations of monetary tightening and offer some relief to cryptocurrency markets.
Since the beginning of July, Bitcoin has remained within a narrow range of approximately $63,800 to $64,200. The limited movement suggests that investors are reluctant to take large positions before receiving clearer signals on inflation and monetary policy.
A decisive break below the current range could reinforce the bearish technical outlook. A recovery above nearby resistance levels, supported by softer inflation data, could instead trigger a short-term rebound.
Key takeaways
- Bitcoin declined by approximately 14% in the second quarter of 2026, marking its third consecutive quarterly loss and its longest negative quarterly sequence since 2022.
- Spot Bitcoin ETFs recorded their largest monthly net outflow since their US debut in January 2024.
- Institutional capital appears to be rotating towards artificial intelligence companies, semiconductor stocks and major stock-market listings.
- The Federal Reserve’s unexpectedly hawkish shift has reduced demand for risk assets, although higher inflation expectations may also strengthen the long-term appeal of assets perceived as protection against currency depreciation.
- Lower futures open interest has reduced the immediate risk of a large liquidation cascade compared with conditions recorded in May.
- The US CPI report due on July 14, 2026, is likely to be the most important event for Bitcoin and broader financial markets in the coming weeks.
Data sources: BeInCrypto, CoinDesk, Investing.com, Intellectia.ai, CrypS.pl, Federal Open Market Committee documents and Federal Reserve data published in July 2026. The article is based on the cited market data and independent analysis.
This material is analytical in nature and does not constitute an investment recommendation.
Disclaimer: This article is provided for informational and analytical purposes only. It does not constitute investment advice, financial advice or a recommendation to buy or sell cryptocurrencies or any other financial instruments. Cryptocurrency markets are highly volatile and investors may lose some or all of their invested capital. Any investment decision should be preceded by independent research and, where appropriate, consultation with a licensed financial adviser.
