This article is reprinted with permission from CoinRank, and the copyright belongs to the original author.
After a week of intense volatility, the global cryptocurrency market showed strong signs of recovery on Monday (August 4, 2025). The prices of major digital assets such as Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Solana (SOL) significantly rebounded, with the total market capitalization climbing to $3.85 trillion. This rebound is not only a response to last week's ETF fund outflows and weak U.S. employment data but also reflects the complex emotions of investors amid political and economic uncertainty.
According to CoinGecko, as of August 4, the total market capitalization of the cryptocurrency market reached $3.85 trillion, growing by 2.3% within 24 hours, with trading volume hitting $108 billion.
Meanwhile, market volatility triggered large-scale liquidations. According to CoinGlass, over $230 million in cryptocurrency positions were liquidated in the past 24 hours, with short positions dominating, amounting to $179 million. Ethereum saw liquidations of approximately $80 million, leading Bitcoin's $44 million, highlighting the intense short-term tug-of-war in the market.
This price rebound is viewed by market analysts as a correction to the overly pessimistic sentiment from the previous week. On August 1 (last Friday), the cryptocurrency market plummeted due to disappointing U.S. employment data and political turmoil. However, investors seem to have quickly digested these negative factors and rebuilt their confidence in digital assets. What exactly drove this round of rebound? The answer may lie in the complex interplay of ETF fund flows and macroeconomic signals.
Record Fund Outflows
Cryptocurrency ETFs serve as a bridge between traditional finance and digital assets, and their fund flows are significant indicators of market sentiment. However, data from August 1 showed that the spot Bitcoin ETF experienced a net outflow of $812 million in a single day, marking the second-largest single-day outflow since the ETF's launch in January 2024. Meanwhile, the Ethereum ETF also recorded a net outflow of $152 million, ending a 20-day inflow streak in July.
According to the latest report from CoinShares, digital asset investment products saw a total net outflow of $223 million last week, reversing the trend of $883 million in net inflows at the beginning of the week. The Bitcoin ETF led with an outflow of $404 million, while the Ethereum ETF maintained a net inflow of $133 million, continuing its record of positive inflows for 15 weeks. Despite the significant short-term outflows, the year-to-date inflows remain strong: the Bitcoin ETF has accumulated a net inflow of $20 billion, and the Ethereum ETF also enjoys stable funding support.
Drivers Behind the Outflows
The CoinShares report pointed out that the main reasons for the ETF fund outflows are the Federal Reserve's hawkish signals and market concerns about the economic outlook. On August 1, the weak U.S. employment data further intensified risk-averse sentiment, leading to over $1 billion in fund outflows on Friday alone. However, the report also emphasized that the net inflow of $12.2 billion over the past 30 days accounted for 50% of the total inflows this year, indicating that short-term profit-taking may be just part of a market adjustment rather than a reversal of long-term trends.
Market analysts believe that the ETF fund outflows reflect a cautious attitude among investors amid heightened uncertainty, but the long-term inflow trend shows that institutional confidence in the crypto market remains solid. In particular, the continued inflow into the Ethereum ETF indicates that investors are optimistic about the long-term potential of the Ethereum ecosystem (such as DeFi and smart contracts).
The U.S. employment report released on August 1 became the catalyst for market volatility. The report showed that only 73,000 new jobs were added in July, far below market expectations, and the total number of new jobs in previous months was revised down by 258,000. The unemployment rate rose from 4.1% in June to 4.2%, further raising concerns about a weak labor market. These figures not only fell short of economists' predictions but also conflicted with the Federal Reserve's policy goals to combat inflation.
The weak employment data quickly raised market expectations for a rate cut by the Federal Reserve in September. According to the Chicago Mercantile Exchange's FedWatch tool, traders significantly increased their bets on a rate cut following the report's release. This expectation aligns with former President Trump's repeated calls for a loose monetary policy. However, the market did not immediately turn optimistic; instead, it faced further pressure due to political uncertainty.
On the day the employment data was released, Trump suddenly fired the head of the Bureau of Labor Statistics (BLS), Erika McEntarfer, and posted on the "Truth Social" platform, claiming that the employment report was "manipulated," and that the monthly revision data was "fabricated" to cover up the economic truth and undermine the Republican political image. This statement raised questions about the credibility of the data, further exacerbating investor anxiety.
Trump's post stated: "These significant adjustments are meant to cover up and smooth over those fabricated political data, which were concocted to make the Republican Party's great victory look less glorious!!!" Although these statements lack substantial evidence, they undoubtedly added a political hue to market volatility.
On August 4, Kevin Hassett, director of the National Economic Council, stated that the White House plans to appoint "high-quality talent" to the Bureau of Labor Statistics to bring about "a new starting point and perspective." This statement may aim to quell market concerns about data transparency, but in the short term, the shadow of political intervention still looms over the market.
The rebound in the cryptocurrency market on Monday reflects investors' correction of the overly pessimistic sentiment from the previous week. Although the weak employment data and political turmoil triggered short-term sell-offs, the market quickly digested these negative factors. Several factors may have driven the rebound:
Rising Expectations for Rate Cuts: Weak employment data strengthened market expectations for a rate cut by the Federal Reserve in September. Loose monetary policy typically benefits risk assets, including cryptocurrencies.
Slowing ETF Fund Outflows: Although ETF fund outflows were significant last week, the long-term inflow trend indicates that institutional investors have not completely withdrawn. The market may view the short-term outflows as profit-taking rather than a collapse of confidence.
Technical Rebound: After the market hit a low over the weekend (such as BTC at $112,300), technical buying and short covering may have driven the price rebound.
While Trump's political actions temporarily intensified market volatility, his continued calls for rate cuts may provide indirect support for the crypto market. Rate cuts typically weaken the dollar and boost the prices of risk assets, while cryptocurrencies, as high-volatility assets, often perform strongly under expectations of loose policies. However, the political intervention in data agencies may also trigger long-term uncertainty, and investors need to closely monitor subsequent policy developments.
Related: Cryptocurrency exchange Gate launches spot trading services in the U.S.
Original article: “Crypto Market Rebounds After Bearish Data”
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