Bitcoin ETFs have extended their longest inflow streak since September, with BlackRock's IBIT posting its best weekly performance in six months, but on-chain data suggests the rally may be built on a house of cards.
Weekly flows tell a similar story. ETFs saw $823.7 million in inflows for the week ending April 24, following back-to-back weeks of $996.4 million and $786.3 million—three straight weeks of strong institutional demand. BlackRock's IBIT led the charge, posting $983 million in weekly inflows, its highest in six months.
On-chain data cautionsWhile ETF demand is clearly high and sustained, not all signals are bullish. The current rally lacks a key ingredient, according to Ki Young Ju, founder of on-chain analytics platform CryptoQuant.
Bitcoin is currently futures-driven.
Open interest is rising, but on-chain apparent demand remains net negative despite ETF inflows and Saylor buys.
Illia Otychenko, lead analyst at CEX.IO, echoed the cautionary note. “Recent price action suggests short liquidations have played a significant role in the rally, with open interest rising alongside price, which points to leverage contributing to the move,” he told Decrypt. “That often signals at least part of the rally has been driven by a short squeeze rather than broad spot demand alone.”
Because bearish traders continue adding short exposure, Otychenko said there is still room for further upside if more shorts are forced to unwind. However, for the rally to become sustainable, stronger spot demand, increased on-chain activity, and broader participation are necessary. Without those, a correction may follow.
Ju's warning highlights a similar disconnect.
Though ETFs are absorbing supply, spot buying across exchanges, where the majority of trading occurs, is not keeping pace. That setup signals increased leverage from futures investors rather than genuine spot accumulation.
A meaningful share of recent ETF demand may be tied to cash-and-carry trades, in which institutions buy IBIT shares while shorting CME futures to capture the spread, Otychenko noted.
This strategy is market-neutral, meaning not all the inflows should be viewed as outright bullish conviction. In a cash-and-carry trade, institutions buy spot Bitcoin ETF shares while simultaneously shorting Bitcoin futures on CME, profiting from the price difference regardless of whether Bitcoin goes up or down.
“Funding rates are near historical lows, while long-term holders are showing record levels of accumulation,” Otychenko said. “One of these two groups is likely to be proven very wrong. That kind of tension usually does not last long, and when it resolves, the move tends to be fast and decisive.”
Until spot demand catches up, the outlook for Bitcoin and the broader crypto market remains uncertain.
