Bitcoin (BTC) price is attempting a recovery, rising for four consecutive days to reach $62,615, its highest point since June 23. This represents an 8.7% increase from its lowest point this month. The rebound comes as investors buy the dip following a drop of over 50% from its all-time high, even as exchange-traded funds (ETF) experience significant outflows.

ETF Outflows and Market Rotation

Despite the price recovery, data suggests American investors have been selling assets in recent months. Inflows jumped to $4.5 billion last month, marking the worst monthly performance since ETFs were approved in 2024. SoSoValue data shows inflows rose by $221 million on Thursday, ending a ten-day period of sustained outflows.

One potential reason for the outflows is a rotation from the crypto industry to the booming stock market. Top US stock indices have recently jumped to record highs, with ETF inflows surging. The Vanguard S&P 500 ETF (VOO) added over $90 billion in assets this year and crossed the $1 trillion mark. Investors in Japan and South Korea have also rotated from crypto to stocks, with companies like Kioxia, SK Hynix, and Samsung more than doubling this year.

Risks from Strategy Holdings

Bitcoin faces a major risk from Strategy (MSTR), which hinted it will start selling its Bitcoin holdings in the near term to boost cash reserves. This is significant because a previous decision to sell 32 coins in early June pushed Bitcoin below $60,000. If Strategy starts selling, it could trigger a reversal and encourage other Bitcoin treasury companies to sell their holdings.

Technical Analysis and Downside Risks

The daily chart shows BTC price has bounced back modestly from the year-to-date low of $57,828 to $62,823. However, it remains below the 50-day and 100-day moving averages, suggesting bears are still in control. The coin is likely in the handle section of an inverted cup-and-handle pattern. A drop below the support of $58,000 could point to further downside, potentially to $50,000.

Bitcoin (CRYPTO: BTC) has delivered nearly identical returns under President Donald Trump’s second term and former President Joe Biden’s administration, suggesting macroeconomic conditions, not politics, have been the dominant force. In a podcast on June 30, analyst Benjamin Cowen compared Bitcoin’s price action across recent U.S. presidential administrations and found that the current cycle is tracking Biden’s term far more closely than many investors may expect.

After 524 days in office, Bitcoin was down 43.8% during Biden’s presidency. At the same point in Trump’s second term, the cryptocurrency was down 41.1%, a remarkably similar trajectory despite vastly different political environments. By comparison, Bitcoin’s strongest presidential-cycle performances came during Barack Obama’s second term and Trump’s first administration. However, Cowen noted those gains coincided with Bitcoin’s much smaller market capitalization.

Macro Shift Changed The Cycle

Cowen argued the primary difference between earlier Bitcoin bull markets and the current cycle has been the broader macroeconomic backdrop. Unlike previous cycles, investors have had to contend with persistent inflation, higher unemployment concerns and tighter financial conditions, all of which have weighed on risk assets. Rather than attributing Bitcoin’s weakness to politics, Cowen said macroeconomic conditions have largely dictated market performance.

Cowen also highlighted the U.S. Dollar Index (DXY) as an important macro indicator. He noted that the dollar’s recent recovery closely resembles its behavior during Trump’s first administration, when it initially weakened after inauguration before recovering and acting as a headwind for risk assets. Based on that historical comparison, Cowen expects the dollar could continue strengthening toward the 105-106 range, potentially creating additional pressure for cryptocurrencies through the remainder of the year.

History Suggests Bottom Could Come Later This Year

Despite the prolonged correction, Cowen pointed to similarities with the previous market cycle. During Biden’s presidency, Bitcoin experienced a brief counter-trend rally in late summer before making one final decline that ultimately marked the cycle bottom ahead of the next bull market. If the current cycle continues following that historical pattern, Cowen believes Bitcoin could establish its bottom later this year before beginning a new expansion phase in 2027.