Bitcoin spot exchange-traded funds (ETFs) posted net inflows of $510 million over the past three trading sessions, raising signs of a shift after eight weeks of large outflows.

Decrypto, a blockchain media outlet, reported on July 8 that bitcoin spot ETFs, seen as a leading Wall Street crypto investment product, recorded net inflows for three straight trading sessions since last Friday.

The inflows are seen as the first clear reversal signal since the sharp redemption trend that began in early May. James Butterfill, head of research at asset manager 21Shares, said, "Sentiment seems like it could be turning to a rebound phase." He added it was the biggest inflow since outflows began in early May, and said the worst period may be passing.

Bitcoin spot ETFs have attracted funds rapidly in recent years, but about $8 billion flowed out over the past eight weeks. Investors moved defensively as bitcoin fell to its lowest level in 21 months. The fallout widened cumulative net outflows since the start of the year to $2.8 billion.

Market prices also rebounded somewhat. Bitcoin traded around $62,000 as of July 8 and rose 4 percent over the past week. It slid to $58,000 early this month, deepening a downtrend from $126,000 on Oct. 12 last year.

Butterfill said the outflows amounted to 8 percent of assets under management in bitcoin spot ETFs. He saw that ratio as similar to the level seen at the 2018 cycle low. He also assessed this year’s correction as resembling the period in February last year when investors pulled $5.2 billion.

The average purchase price for ETF investors is still above the current price. Glassnode data put the average entry price for bitcoin spot ETF investors at about $83,800. That means a significant number of investors are sitting on unrealised losses at current prices.

On the supply-and-demand side, selling pressure from large holders has recently eased, standing out. Butterfill said whale investors, who typically hold 1,000 or more bitcoins, sold more than $40 billion worth of bitcoin since last year’s peak. He said factors that had been putting downward pressure on prices have recently been reduced.

Whether the rebound will immediately lead to a trend reversal remains unclear. That is because expectations for U.S. monetary policy could still cap bitcoin’s upside. Butterfill said, "It is not a situation where we can say the Fed is about to cut rates," and added, "That environment would be very favourable for bitcoin, but it is not there yet." He said, "Bitcoin is very sensitive to inflation expectations, and accordingly is also affected by the Iran war and the Fed outlook."

This bitcoin spot ETF correction is record-setting in total outflows, but daily outflow intensity was weaker than last year. CoinGlass data showed the peak daily net outflow in the recent correction phase was $733 million, and there were several days last year that exceeded that. The market is watching whether the short-term inflows will prove a temporary rebound, or the starting point for an actual shift in ETF fund flows.