Digital assets are making a powerful comeback, with cryptocurrency ETFs rebounding sharply in mid-July. Investors are responding to shifting macroeconomic expectations and evolving political sentiment, particularly around U.S. monetary policy and regulatory outlook. The rally has been broad-based, with both Bitcoin and Ethereum leading gains, while ETFs tracking these assets have seen substantial inflows and price appreciation.
Cryptocurrency ETFs Rebound Strongly
Since early July, digital currency ETFs have staged a notable recovery. From July 8 to July 17, multiple spot cryptocurrency ETFs listed in Hong Kong posted gains of nearly 20%, signaling renewed investor confidence.
Among Ethereum-focused funds, the rebound has been especially strong. According to Wind data:
- China Asset Management’s Ethereum ETF rose 21.04% from its recent low
- Bosera Ethereum ETF gained 21.03%
- Harvest Ethereum ETF climbed 20.9%
Bitcoin ETFs also showed robust momentum:
- Bosera Bitcoin ETF: +20.03%
- Harvest Bitcoin ETF: +19.82%
- China Asset Bitcoin ETF: +18.89%
These six spot ETFs—offered by China Asset Management (Hong Kong), Bosera International, and Harvest Fund International—launched on April 30 and faced drawdowns exceeding 20% in June before stabilizing and reversing course in July.
Additionally, CSOP Asset Management’s Bitcoin and Ethereum futures ETFs, which invest in CME-traded futures contracts, rose 18.58% and 22.25% respectively during the same period, underscoring broad-based demand across different exposure types.
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Trump Trade and Rate Cut Expectations Fuel Rally
The recent surge in digital assets is being driven by two powerful market narratives: the so-called “Trump trade” and rising expectations for Federal Reserve rate cuts.
The “Trump Trade” Boost
As former U.S. President Donald Trump’s odds of winning the 2024 election improve, markets are pricing in a more favorable regulatory environment for cryptocurrencies. Martin Leinweber, Director of Digital Asset Research at Market Vector, notes that rising support for Trump has increased appetite for risk assets like Bitcoin.
This sentiment was reinforced when the Republican Party unveiled its 2024 platform, which included strong pro-crypto language—such as ending what it calls Democratic "crackdowns" on digital assets, defending the right to mine Bitcoin, and ensuring individuals can self-custody their assets without surveillance.
This stands in stark contrast to the Biden administration’s approach, which has seen the Securities and Exchange Commission (SEC) file lawsuits against major platforms like FTX, Binance, and CoinDesk, resulting in over $5 billion in penalties. The SEC has also maintained that most cryptocurrencies are unregistered securities.
Katie Biber, Chief Legal Officer at Paradigm, described the inclusion of crypto-friendly policies in the Republican platform as a “historic breakthrough,” reflecting growing mainstream acceptance.
Rate Cut Hopes Add Momentum
At the same time, dovish signals from Federal Reserve Chair Jerome Powell have boosted risk appetite. Powell recently stated that recent inflation data has improved enough that the Fed doesn’t need to wait until inflation hits 2% before cutting rates.
Morgan Stanley analysts noted that inflation stickiness appears to be fading, with core PCE inflation holding at or below 2%. They now project seven rate cuts over the next 12 months.
Market expectations reflect this shift. According to the CME FedWatch Tool:
- 100% probability of a rate cut in September
- 93.3% chance of a 25-basis-point reduction
- 6.7% chance of a 50-basis-point cut
Lower interest rates typically weaken the U.S. dollar and reduce bond yields, making non-yielding but scarce assets like Bitcoin more attractive.
Bitcoin as Inflation Hedge Gains Traction
With growing concerns about fiscal sustainability and monetary expansion, Bitcoin is increasingly viewed as a hedge against inflation and dollar depreciation.
The research team at Guosheng Securities argues that as the global trust in the U.S. dollar weakens, Bitcoin—being finite in supply and now integrated into regulated markets via CME—can serve as a store of value similar to gold.
Unlike fiat currencies, which can be printed indefinitely, Bitcoin’s capped supply of 21 million units makes it inherently deflationary. This scarcity, combined with institutional adoption, is reinforcing its status as a long-term hedge against currency debasement.
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Institutional Demand Rises as ETF Inflows Accelerate
Investor appetite for crypto exposure through regulated vehicles is surging.
In July alone:
- China Asset Bitcoin ETF: +31.8 million shares
- Bosera Bitcoin ETF: +10.2 million shares
- Ethereum-focused ETFs from Harvest, China Asset, and Bosera each saw net inflows of 20–50 million shares
Total estimated inflows exceeded 700 million RMB, indicating strong retail and institutional participation.
Meanwhile, U.S.-listed Bitcoin spot ETFs saw even larger flows. According to SoSoValue, net inflows reached $781 million from July 3 to July 10—a 251.8% increase week-on-week. Victory Securities attributes this to growing recognition of Bitcoin as a legitimate safe-haven asset and optimism about its long-term value.
Larry Fink, CEO of BlackRock—the world’s largest asset manager—has also shifted his stance. Once skeptical, he now calls Bitcoin “digital gold” and emphasizes its role in diversified portfolios.
On July 15, Fink stated that rising U.S. government debt and political uncertainty are key reasons investors are turning to Bitcoin. “When you worry about currency devaluation due to massive deficits,” he said, “Bitcoin becomes a compelling tool.”
BlackRock’s iShares Bitcoin Trust has already attracted over $18 billion since its January launch, making it the largest Bitcoin ETF globally. The firm has also filed for an Ethereum ETF, signaling continued expansion into digital assets.
Frequently Asked Questions (FAQ)
Q: What caused the recent 20% rebound in cryptocurrency ETFs?
A: The rally was driven by improving sentiment around U.S. monetary policy (rate cut expectations) and political support for crypto (the "Trump trade"), along with renewed institutional demand.
Q: Are cryptocurrency ETFs safe for retail investors?
A: Spot ETFs listed on regulated exchanges offer a secure way to gain exposure without holding private keys. However, they still carry market risk and should be part of a diversified strategy.
Q: How do rate cuts affect Bitcoin prices?
A: Lower rates reduce bond yields and can weaken the dollar, making non-yielding but scarce assets like Bitcoin more attractive as stores of value.
Q: What’s the difference between spot and futures-based crypto ETFs?
A: Spot ETFs hold actual cryptocurrencies and track real-time prices, while futures ETFs invest in derivative contracts, which may deviate from spot prices due to roll costs and market structure.
Q: Why is Trump’s stance on crypto important?
A: A potential shift toward lighter regulation under a Trump administration increases investor confidence and could accelerate adoption through clearer legal frameworks.
Q: Is Bitcoin really “digital gold”?
A: Many institutional investors now view Bitcoin this way due to its fixed supply, decentralization, and growing acceptance as a long-term hedge against inflation and currency risk.
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Final Thoughts
The recent 20% rebound in cryptocurrency ETFs reflects more than just short-term speculation—it signals a structural shift in how digital assets are perceived by institutions and policymakers alike. With growing macro tailwinds from rate cuts and political support, combined with strong ETF inflows, Bitcoin and Ethereum are regaining momentum as strategic portfolio components.
As traditional financial leaders like BlackRock embrace digital assets and regulatory clarity improves, the path forward for crypto appears increasingly institutionalized—and resilient.