Institutional Rotation Deepens as ETH Outshines BTC

Market Overview

This past week saw a notable divergence in momentum between Bitcoin and the broader altcoin complex, particularly Ethereum. Bitcoin traded in a tight band near $118,500 for much of the week before easing to close around $116,868 on Sunday, reflecting light profit-taking from long-term holders. Ether, by contrast, added nearly 4% and ended the week at $3,679, after briefly approaching $3,761. The move was supported by sustained ETF inflows and increased treasury allocations, prompting early signs of capital rotation into large-cap altcoins.

Market participants appear to be rotating capital from Bitcoin to Ethereum as institutional inflows pivot. Spot ETH ETFs extended their net inflow streak to 12 consecutive days, bringing in $296.6 million on Monday alone, surpassing Bitcoin ETF flows, which saw a net outflow of $131.35 million that same day. The flow divergence, combined with a 5% drop in BTC dominance over the past week, is fuelling expectations of a broader altcoin cycle.

Min Jung of Presto Research noted that the bid behind BTC remains largely institutional, particularly among treasury allocators unlikely to sell aggressively. However, she also highlighted that older wallets have begun realizing gains, introducing short-term volatility. This was evident as three dormant wallets, active since 2020, moved over $1.26 billion in BTC, potentially as part of strategic reallocation or OTC sale preparation.

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Institutional Rotation: BTC to ETH and Beyond

Spot Ethereum ETFs have now recorded $3.53 billion in net inflows since July 24, with daily flows outpacing Bitcoin ETFs on multiple occasions. BlackRock's ETHA and Fidelity’s FETH led the latest wave, attracting $102 million and $126.93 million respectively. This trend signals renewed institutional conviction in Ethereum, potentially laying the groundwork for a more sustained altcoin season.

Jung added that this pattern, Bitcoin rallying first, followed by ETH strength, and then broader altcoin participation, is consistent with previous market cycles. However, she cautioned that institutional flows may remain concentrated in large-cap names, creating a narrower rally compared to past retail-led alt seasons.

Nick Ruck of LVRG Research echoed the sentiment, attributing current momentum to corporate treasuries and traditional finance firms increasing exposure to ETH and select altcoins. He also pointed to growing interest in DeFi and tokenized real-world assets (RWAs), where TradFi is finding new footholds in the digital asset space.

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ETF Flows and Treasury Signals

• Bitcoin ETFs: Snapped a 12-day inflow streak with $131 million in net outflows, largely driven by ARKB (-$77.46M), while BlackRock’s IBIT reported zero flows.
• Ethereum ETFs: Continued their 12-day inflow streak, with Fidelity, BlackRock, and Grayscale leading the charge.
• Treasury Trend: Public companies are increasingly integrating ETH into treasury portfolios, signalling long-term conviction in the asset’s programmable and yield-generating capabilities.

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Onchain Signals: Dormant Whales and Cautious Profit-Taking

Whale activity continues to raise eyebrows. On Tuesday, Lookonchain reported that three long-dormant Bitcoin wallets, initially funded in December 2020,moved over 10,600 BTC (~$1.26B). These wallets remained inactive for nearly four years, and their reactivation closely follows the movement of 80,000 BTC ($9.5B) earlier this month by a Satoshi-era wallet later linked to Galaxy Digital.

The timing suggests a combination of profit-taking and strategic repositioning considering BTC’s earlier rally to $123,000. Despite the transfers, there’s no definitive indication of exchange deposits, which points to OTC structuring or long-term custodial shifts.

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Crypto Equities: Ark Invest Rebalances, Bitmine Accumulates ETH

Ark Invest reduced its exposure to Coinbase, selling $12.1 million worth of shares across its ARKK and ARKW ETFs. The firm also shed positions in Block Inc. and Robinhood while simultaneously acquiring $175 million in Bitmine, a crypto miner that recently disclosed a $1 billion ETH treasury.

Bitmine’s Ethereum-heavy strategy reflects the broader institutional pivot underway. As more miners and funds shift part of their balance sheets toward Ethereum, it adds further credence to the narrative of ETH as a programmable treasury asset.

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Macro Landscape: Fed on Hold as PMI and Jobs Data Loom

This week’s macro calendar will be pivotal for both TradFi and crypto markets:

• July 30 FOMC Meeting: The CME FedWatch Tool shows a 95.3% probability the Fed will keep rates steady at 4.25–4.50%.
• PMI (Manufacturing & Services): A barometer of U.S. economic activity, expected to guide sentiment around growth momentum.
• Initial Jobless Claims: A key input into Fed calculus, especially given the dual mandate of full employment and price stability.

Markets are poised for volatility depending on whether this week’s data points to cooling inflation and labour softness, both of which would raise the probability of a September rate cut. A dovish shift would likely buoy both risk assets and crypto further.

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Looking Ahead

• Altcoin Season?: Watch ETH/BTC pair and BTC dominance, continued ETH outperformance with stable BTC could accelerate rotation into large-cap altcoins.
• ETF Watch: Continued inflows into spot ETH ETFs will be a key signal.
• Fed Meeting & U.S. Macro: July 30 decision and economic prints may set the tone for August trading.
• Regulatory Momentum: Recent XRP price action shows the market remains highly reactive to favourable legislative developments.

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Final Thoughts

Institutional capital remains the dominant force in the crypto market, with behaviour patterns now diverging from prior retail-led rallies. Ethereum’s growing share of ETF flows, its treasury integration among corporates, and a softening in Bitcoin dominance suggest we may be witnessing the early stages of a structurally different altcoin cycle.

As always, sustained momentum will depend on macro clarity, regulatory support, and the ability of the broader altcoin market to capture institutional interest beyond the majors.