Bitcoin BTC +3.09% has performed a muted recovery over the past day, posting a 5% gain on the eve of the digital asset's halving event.

The cautious uptick comes despite spot bitcoin exchange-traded funds (ETFs) recorded a streak of net outflows. According to The Block’s Data Dashboard, the combined U.S. spot bitcoin ETFs have now registered outflows totaling $641 million for the past five consecutive trading days, beginning last Friday. In the same time period, ETF inflows were only $321 million, leading to a net negative flow of $320 million. This is the longest net outflow streak for a month and comes ahead of the supposedly bullish halving event.

The largest digital asset by market capitalization increased by around 5% in the past 24 hours and was changing hands for $65,331 at 8:37 a.m. ET, according to The Block's Price Page. However, market volatility saw the price quickly decline below the $65,000 mark. The GM 30 Index, representing a selection of the top 30 cryptocurrencies, has increased by 3.74% to 130.64 in the past 24 hours.

The price of bitcoin has increased above the $65,000 mark. Image: The Block.

Risk-on sentiment lingering on eve of halving

Bitcoin halving market sentiment was notably optimistic until a week ago, with many analysts anticipating a post-event price surge. This optimism was partly fueled by bitcoin surpassing its 2021 cycle high even before the halving, reaching a new all-time high of over $73,000 in the middle of March and attracting increased interest from institutional and retail investors alike.

However, according to Bitfinex Head of Derivatives Jag Kooner, following last weekend’s de-leveraging event after the launch of missiles and drones from Iran towards Israel, risk-on market sentiment has overshadowed the former exuberance surrounding the bitcoin halving.

"It remains to be seen if the macro conditions will affect fundamentals but sentiment is decidedly more cautious now than it had been just a week ago," Kooner said in a note sent to The Block.

Bitcoin price performance post-halving

According to Coincover Head of Strategy Duncan Ash, in the short term, the upcoming halving will see elevated prices until value increases deter new investors. "This will then restore a closer balance between the number of buyers and sellers and settle the market. In addition, the industry will emerge with more users, a higher market cap, and greater liquidity," Ash said in an email to The Block.

However, Coinbase analyst David Han said that investors should not rule out a bitcoin post-halving price correction.

"Given the elevated levels of realized year-to-date volatility, a further move downwards is well within the realm of possibility. That said, options pricings and onchain metrics still indicate constructive cyclical positioning even as traders appear to be preparing for possible chops lower in the near term," Han said in an email sent to The Block.