BTC and ETH draw inflows as $236M exits USDC stablecoin

Investors rotated $236 million out of USDC into Bitcoin and Ethereum on July 21, shifting on-chain liquidity preferences toward volatile assets.

Bitcoin and Ethereum posted net inflows while USDC recorded a $236 million net outflow on July 21, data show, as crypto investors repositioned across on-chain assets.

"The USDC outflow suggests capital is rotating into BTC and ETH spot positions rather than leaving the ecosystem entirely," Lucas Campbell, research director at on-chain analytics firm Glassnode, said.

The divergence comes as spot Bitcoin ETFs extended their winning streak to five consecutive sessions, with $226.8 million in net inflows on July 20 alone, led by BlackRock's iShares Bitcoin Trust at $116.5 million, per Farside Investors. Bitcoin traded near $66,000 on July 21, up about 0.8 percent in 24 hours, while Ethereum changed hands above $1,900, CoinGecko data show. The total crypto market capitalization climbed back above $2.2 trillion.

The $236 million USDC drawdown reduces stablecoin liquidity available for DeFi protocols and exchange trading pairs, potentially amplifying volatility if Bitcoin or Ethereum fail to hold current support levels near $65,000 and $1,880, respectively.

The flow pattern mirrors a broader shift in institutional positioning. Spot Bitcoin ETFs drew $226.8 million in net inflows on July 20, with BlackRock's IBIT capturing $116.5 million, Fidelity's FBTC adding $24.1 million and ARK Invest's ARKB contributing $72.7 million, according to Farside Investors. Grayscale's GBTC continued to see outflows, losing $45.4 million on the day, partially offset by $41.4 million entering its Mini Bitcoin Trust.

On Polymarket, traders have priced a 70 percent probability of Bitcoin reaching $67,500 in July, up from 56 percent earlier in the week. The market assigns an 82 percent chance of Bitcoin touching $65,000 and a 13 percent probability of a drop below $60,000.

The USDC outflow — the largest single-day drawdown in recent weeks — reduces the stablecoin's circulating supply, which stood at roughly $34 billion as of mid-July, per DefiLlama. A shrinking stablecoin supply typically signals either capital rotation into volatile assets or outright exit from crypto markets. The concurrent Bitcoin and Ethereum inflows suggest the former.

This article is for informational purposes only and does not constitute investment advice.