On December 23, US spot Bitcoin (BTC) exchange-traded funds (ETFs) experienced significant outflows totalling $226 million, while Ethereum ETFs saw inflows of $130 million. The stark contrast in net flows between these two ETFs has sparked discussions among crypto analysts about whether an altcoin season might be on the horizon.
Capital Flow Pivots From Bitcoin ETFs To Ethereum ETFs
Bitcoin ETFs have been grappling with substantial outflows since December 19, with total outflows surpassing $1.1 billion at the time of writing. Notably, this trend comes after 15 consecutive days of inflows, during which Bitcoin ETFs’ total net assets surged from $100 billion to $121 billion.
On December 19 alone, Bitcoin ETFs recorded $680 million in outflows – the largest single-day outflows since Bitcoin ETFs were introduced earlier this year – causing their total net assets to fall to $105 billion. A key contributor to this decline was Grayscale’s GBTC fund, which sold 1,870 BTC over a three-day period.
While some market analysts attribute the recent outflows to profit-taking, others believe this trend could reflect a shift in investor sentiment toward the flagship cryptocurrency. Specifically, it appears there may be a significant capital reallocation from Bitcoin ETFs to Ethereum ETFs.
Supporting this view, Ethereum ETFs have been attracting growing interest, as evident from recent inflow data. According to figures from SoSoValue, Ethereum ETFs received $130 million in inflows on December 23, the same day Bitcoin ETFs reported $226 million in outflows.
The rising capital inflows to Ethereum ETFs are not unexpected, as institutional interest in the second-largest cryptocurrency by market cap continues to grow. A recent report noted that BlackRock’s iShares Ethereum Trust ETF has amassed more than a million ETH.
Bullish Sentiment For Ethereum Grows
Despite Ethereum underperforming relative to other cryptocurrencies like Solana (SOL), SUI, and XRP for much of the year, analysts believe the tides may be turning in ETH’s favor. One of the key reasons for this optimism is the declining Bitcoin dominance, which many see as a precursor to the long-awaited “altcoin season.”
Moreover, bullish technical indicators are fuelling positive sentiment for Ethereum’s price. For instance, the ETH/BTC trading pair posted a higher low on December 22 on the daily chart, signalling a potential trend reversal and potential gains for ETH.
In addition, weekly net inflows into Ethereum staking contracts have been on the rise, suggesting more ETH is being locked up in staking. This reduction in the circulating supply could create upward pressure on Ethereum’s price.
That said, seasoned crypto analyst Ali Martinez expects Ethereum’s next move up to be slightly delayed. At press time, ETH trades at $3,363, down 2.7% in the past 24 hours.
