Bitcoin held above $118,700 on Thursday as global digital asset markets faced increasing pressure from profit-taking and continued outflows from Bitcoin exchange-traded funds (ETFs).

The world’s largest cryptocurrency by market cap came under fresh selling pressure as long-term investors took profits, while US-based Bitcoin ETFs continued to record net outflows. This mix of macroeconomic and market-specific factors weighed on prices, despite sustained underlying demand.

At the same time, Tesla (TSLA) reported unrealized gains on its Bitcoin holdings for the second quarter, marking its first crypto-related earnings boost under new US accounting rules, which now allow digital assets to be valued at market price.

Tesla currently holds approximately 11,509 Bitcoin, mostly acquired in 2021. With Bitcoin rising 30% in Q2, these holdings are now valued at around $1.2 billion.

ETF outflows accelerate as market enters consolidation phase

Data from Farside Investors showed that US-listed Bitcoin ETFs posted net outflows for a third consecutive day. On Wednesday alone, investors withdrew $86 million from these funds, bringing total weekly outflows to over $285 million.

However, not all ETFs saw losses. BlackRock’s iShares Bitcoin Trust (IBIT) recorded $143 million in net inflows. Still, these gains were outweighed by a large $227 million outflow from Fidelity’s Bitcoin fund, along with moderate withdrawals from Bitwise (BITB) and ARK Invest (ARKB) funds.

Adrian Fritz, Head of Research at 21Shares, said Bitcoin remains fundamentally strong despite short-term volatility. “After surging to a new all-time high near $123,000 in mid-July—driven by a technical golden cross and sustained institutional inflows—Bitcoin has since settled into a tight range between $115,000 and $120,000.”

He added that this sideways movement is supported by strong buying interest near $115,000, creating a healthy liquidity battle on both sides of the market.

Fritz also pointed to a more complex macroeconomic backdrop, referencing President Trump’s July 4 signing of the controversial “One Big Beautiful Bill,” which raised the US debt ceiling by $5 trillion and expanded tax cuts and military spending.

Although crypto-friendly provisions like staking and airdrop tax exemptions were removed from the final version, Fritz said the broader implications may still support Bitcoin in the long run.

“Increased borrowing and fiscal spending typically lead to long-term inflationary pressure, which in turn drives demand for hard assets like gold and Bitcoin.”

He also cited newly released US CPI data, which showed inflation rising to 2.7% in June from 2.4% in May, as further evidence of sustained inflationary trends.

Tesla posts Bitcoin gains amid challenging quarter

Tesla’s Q2 earnings came in below market expectations, with revenue of $22.5 billion versus a forecast of $22.64 billion. Adjusted EPS was $0.40, slightly under the expected $0.42. This marks a 12% year-over-year revenue decline—the company’s steepest drop in over a decade.

Operating income also fell to $923 million, well below the expected $1.23 billion. Revenue from regulatory credit sales dropped to $439 million, down from $890 million in the same quarter last year.

However, Tesla’s Bitcoin holdings emerged as a bright spot. The company recorded unrealized gains under the new 2024 accounting standards, and these were included in its reported financials, offering a modest boost amid weaker vehicle sales.

Oil prices rose by more than 1% on Thursday, supported by optimism surrounding US trade negotiations that may ease pressure on the global economy, in addition to a sharper-than-expected drop in US crude inventories.

Brent crude futures climbed 79 cents, or 1.15%, to $69.30 per barrel as of 09:34 GMT. US West Texas Intermediate (WTI) crude futures rose 83 cents, or 1.3%, to $66.08 per barrel.

Yaniv Shah, an analyst at Rystad Energy, stated: “The drawdown in US crude inventories, along with progress in trade talks, is providing some support to prices.”

Two European diplomats said on Wednesday that the European Union and the United States are nearing a trade agreement that may include a baseline 15% tariff on European imports to the US, with the possibility of exempting certain goods — a move that could pave the way for another major trade deal following the recent pact with Japan.

Supply-Side Support

Data from the US Energy Information Administration on Wednesday showed that US crude inventories fell last week by 3.2 million barrels to 419 million barrels — a drop that exceeded analysts’ expectations in a Reuters poll, which had forecast a draw of just 1.6 million barrels.

At the same time, reports of loading delays for Kazakhstan’s CPC crude exports via the Black Sea due to Russian administrative hurdles, along with news of contamination in Azerbaijani crude shipments at Turkey’s Ceyhan port, added further support to prices, according to a note by analyst John Evans at PVM Associates.

Evans added that the continuation of this support depends on how long these disruptions persist.

However, Kazakhstan’s Energy Ministry stated on Thursday — as reported by Interfax — that the country has not halted oil loading through Russian ports.

Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, said: “Uncertainty surrounding US-China trade negotiations, along with peace talks between Russia and Ukraine, is limiting further upside for prices.” He expects WTI crude to remain within a range of $60 to $70 per barrel.

Russia and Ukraine held peace talks in Istanbul on Wednesday, where they discussed additional prisoner exchange operations, although major differences remain between the two sides on ceasefire conditions and the possibility of a direct meeting between the leaders.

Shah added that the next key indicator to watch is demand, especially as the market is currently in peak consumption season, stating: “Any rise or fall in demand will reflect on refining margins.”

The US dollar rose against the euro on Thursday, supported by progress in trade talks between the United States and its key partners, while it fell against the Japanese yen, which gained strength on expectations of an interest rate hike in Japan.

Shinichi Uchida, Deputy Governor of the Bank of Japan, stated that the trade deal with Washington had reduced economic uncertainty, boosting market optimism about the potential resumption of interest rate hikes.

Nevertheless, some analysts believe the yen still faces ongoing challenges due to domestic political instability following Sunday’s Japanese upper house elections.

In Europe, the European Union is reportedly close to finalizing a trade agreement with Washington that would impose a blanket 15% tariff on European goods entering the United States — a move largely in line with economists’ expectations.

Meanwhile, risk assets climbed as market fears over the global trade war eased following progress in negotiations.

The risk-sensitive Australian dollar reached an eight-month high of $0.6625.

The euro slipped by 0.1% to $1.1760, approaching its earlier peak this month of $1.1830 — the highest level for the single currency in over three years.

Mohit Kumar, an economist at Jefferies, commented: “We continue to believe that risk assets may face some volatility in August due to a possible slowdown in US jobs data.”

He added: “So far, tariffs haven’t shown a significant impact on the hard data, but that doesn’t mean the effect won’t surface. We believe the real impact will take around three months to appear in the economic indicators.”

The dollar fell 0.10% against the yen to ¥146.35, extending its losses versus the Japanese currency for the fourth consecutive session.

Olivier Korber, a currency strategist at Société Générale, predicted that the yen would maintain its strength, supported by the trade deal and the prospect of higher interest rates.

Korber said: “Local newspapers report that Prime Minister Shigeru Ishiba will decide on resignation by late August. If that happens, a new party leader is likely to be chosen in September, which would ensure a smoother political transition and help reduce market uncertainty.”

Ishiba had denied on Wednesday that he made a decision to resign, following media reports and sources suggesting his intention to step down in order to take responsibility for the ruling party’s painful defeat in the upper house elections.

On the monetary policy front, attention is now on the European Central Bank’s meeting scheduled later today. Markets expect interest rates to remain unchanged, while investor focus will be on policymakers’ forward guidance. Broadly, markets anticipate one more rate cut from the ECB before year-end, most likely in December.

Data showed that economic activity in Germany continued to grow modestly during July.

In a surprising development, currencies largely shrugged off news that US President Donald Trump — known for his vocal criticism of Federal Reserve Chair Jerome Powell — visited the central bank’s headquarters on Thursday. The unexpected move could heighten tensions between the White House and the Fed.

As of 11:32 GMT, the US Dollar Index rose by 0.2% to 97.3 points, with a session high of 97.4 and a low of 97.1.

Gold prices declined in European markets on Thursday, extending losses for the second consecutive day and moving away from a five-week high. The drop came as part of ongoing correction and profit-taking activity, alongside weakening safe-haven demand amid easing global trade tensions.

Meanwhile, the US dollar began to rebound in the foreign exchange market ahead of key economic data releases from the United States, which are expected to provide further evidence on the likelihood of an interest rate cut in September.

The Price

Gold fell by 0.65% to $3,365.98 per ounce, down from the opening level of $3,387.51. The session high reached $3,393.48.

On Wednesday, gold closed down by 1.3% — its first loss in the past four sessions — due to correction and profit-taking after earlier hitting a five-week high of $3,438.94 per ounce.

Trade Developments

Following the major trade agreement between the United States and Japan, some European Commission officials confirmed that the EU and the US are close to reaching a similar deal. This would impose a 15% tariff on European imports, while exempting certain goods from US duties.

US Treasury Secretary Scott Besant stated that American and Chinese officials will meet in Stockholm next week to discuss extending the trade negotiation deadline to August 12.

US Dollar

The US Dollar Index rose by approximately 0.15% on Thursday, beginning a recovery from its two-week low of 97.10, reflecting continued rebound in the dollar against a basket of global currencies.

This rebound comes amid reports that President Donald Trump will visit the Federal Reserve later today. It remains unclear whether Trump — who has repeatedly criticized Jerome Powell for not cutting US interest rates more aggressively — will meet with the Fed Chair.

US Interest Rates

According to the CME FedWatch Tool: The probability of a 25-basis-point rate cut in the July meeting remains steady at 3%, while the probability of holding rates unchanged is at 97%.

The probability of a 25-basis-point rate cut in the September meeting is currently priced at 64%, versus a 36% chance of no change.

Investors are awaiting key US data due later today, including weekly jobless claims and performance metrics for key sectors of the US economy during July, in order to reassess rate expectations.

Gold Outlook

Bryan Lan, Managing Director at Singapore-based GoldSilver Central, stated: “We saw yesterday that gold prices appeared poised for another upward wave until trade-related news triggered some profit-taking.”

He added, “We also saw a notable decline in the dollar, which of course supports gold. So I think this is just a minor pullback for now — in fact, we remain very bullish on gold.”

SPDR Fund

Holdings of the SPDR Gold Trust, the world’s largest gold-backed ETF, remained unchanged yesterday, keeping the total at 954.80 metric tons — the highest level since June 27.