Investments in Bitcoin, the leading crypto with the largest market capitalization to date, took a brief pause as of late, as some investors cashed out early in June. It may be eyeing a potential bullish pattern as it consolidates in the $103K to $106K range. Should it break above a key $106K, it could enter a path toward a new ATH of $112K. On the other hand, failure to rise could push it below $100K. After retreating from recent highs, the top cryptocurrency is stabilizing, currently valued at around $2.09TN with a daily trading volume standing at $47BN.
On the other hand, investments in the second-cap crypto Ethereum quietly continued to attract steady inflows. Ethereum has attracted approximately $321MN in recent weeks—the most favorable week for the asset regarding investments since late last year. This surge was largely fueled by U.S. spot ETFs, which accounted for approximately $285.8 million. Ethereum has been on a roll, seeing a seven-week streak that brought the cumulative total to about $10.9BN.
These trends indicate a more cautious approach of investors, who are tweaking their strategies with an eye on emerging developments, market conditions, regulatory changes, and the overall market sentiment.
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Significant growth in crypto-based products
Crypto-related investment products, with a focus on exchange-traded products (ETPs) and ETFs, attracted numerous investors and consequently massive capital. Roughly $286MN surged into these products during the last few weeks.
The Crypto Assets Under Management (AUM) represents a metric disclosing the entire market value of digital assets and cryptos managed by a financial institution or retail investor. Despite investors’ impressive interest in crypto, the total AUM was down marginally, indicating minor outflows or market softening. After shedding $10BN—from $187BN to $177BN—the decline can largely be attributed to recent price volatility. The shift decreased the assets’ overall value, even if investors continued to inject funds.
High-impact markets like the U.S., the U.K., Hong Kong, Australia, and Germany registered massive inflows. On the other hand, Brazil, Sweden, and Switzerland saw a number of outflows, reminding us that investors’ region can considerably impact their approach to crypto.
Ethereum appeals to an increasing number of institutional investors
The institutional appetite for Ethereum is gaining momentum. ETH-based investment products have collected over $1.1BN in new capital. These products’ availability and ease of purchase are among the biggest contributors to the asset’s value increase, even though they have been around for a while. The U.S. SEC greenlighted a few spot ETH ETFs in May 2024, with trading commencing on July 23, 2024.
Notably, in September 2024, ETH ETFs recorded substantial outflows, with over $79MN going out on a single day, mainly from Grayscale’s ETH Trust. However, by December of last year, the trend reversed, and ETH ETFs saw record-breaking inflows, amounting to $2.6BN for the month. These shifts reflect ETF flows’ dynamic nature. Prices can fluctuate based on a range of factors, including market conditions, investor sentiment, regulatory changes, and the list can go on.
A closer look at Ethereum’s momentum
Other reasons justifying these trends are:
Utility. Unlike the crypto market’s MVP, Bitcoin, which serves mostly as a store of value, Ethereum is credited with the emergence of non-fungible tokens (NFTs), decentralized finance (DeFi), and smart contracts. The network’s native token, Ether (ETH), has a key role as a utility token, being used to pay fees, incentivize validators, and engage with apps. While Bitcoin’s value is inherently tied to its scarcity, Ethereum’s value is derived from its usage.
Price. Ethereum showed an impressive comeback, climbing from a low of nearly $1,400 in April to a range between $2,400 and $2,550 by June. This strong price recovery doesn’t just showcase market resilience but also rekindles investor confidence, fueling new waves of capital inflows.
Upgrades. Ethereum has shown a transformative evolution over the past year. Its shift from a proof-of-work to a proof-of-stake consensus mechanism slashed its energy consumption considerably, establishing a new standard for sustainability. More innovations, including layer-2 scaling solutions, are on the horizon, and are expected to increase transaction speeds and slash fees. All of these are making Ethereum faster, more efficient, and more scalable than ever before, securing its standing in the market.
Bitcoin is finally registering outflows
Bitcoin has recently registered an outflow of around $8MN, the first outflow in the last six weeks. After months of steady inflows, such an outcome was inevitable. The crypto market consists of cycles. The amount that leaked isn’t much, but enough to indicate that some investors might be moving their attention toward other cryptos or investment vehicles.
What has triggered the outflows
Here are some reasons why several investors exited Bitcoin:
Profit-taking. The price of Bitcoin has increased considerably in recent months, managing to hit new ATHs. It was only a matter of time until investors who registered profits would exit their positions to cash in on their investment. Notably, some BTC owners may have determined that ditching a part of all of their possessions could help secure proceeds.
Skepticism. A recent U.S. court ruling that reestablished select trade tariffs impacted investor sentiment, rekindling concerns around economic stability and global trade tensions. Bitcoin is a volatile and risky asset, so it’s susceptible to such macroeconomic developments. The renewed uncertainty triggered skepticism across markets, with many investors choosing to step back—at least until the waters are calm.
ETF movements. BlackRock’s flagship Bitcoin ETF is one of the biggest BTC investment products and has recently recorded more than $430MN in outflows, all in only a week. It was the fund’s first serious setback since its well-awaited launch earlier this year, generating questions about shifting investor sentiment and the sustainability of the recent inflows.
Ethereum’s momentum. A particular share of investors relocated their funds from BTC to ETH, betting on the latter’s stronger growth potential in the near future.
Endnote
Bitcoin remains a leading force in the cryptocurrency market. At the same time, demand for Ethereum is quickly spiking, mainly driven by rising institutional interest and increasing real-world use cases. The upcoming period is pivotal and will determine the trajectories of the two market leaders, so stay close and watch the news!
