Bitcoin News Today: Institutional Capital Abandons Bitcoin, Turns to Ethereum Amid Market Uncertainty

Bitcoin ETFs recorded substantial outflows this week, with nearly $1.6 billion withdrawn from both Bitcoin and Ethereum ETFs, signaling increased investor caution in the cryptocurrency market. Institutional investors pulled approximately $523 million from Bitcoin ETFs and $422 million from Ethereum ETFs on Tuesday alone, contributing to a decline in prices for both assets. Bitcoin fell 8% to $113,948, and Ethereum dropped 10% to $4,290 since reaching their recent peaks [5].

Bitcoin’s price has been consolidating near $109,795, as institutional capital has shifted toward Ethereum and broader altcoins. This rotation reflects a measured reallocation of liquidity following Bitcoin’s all-time high earlier in the year. The shift is also evident in Bitcoin ETFs, which have seen heavy outflows since April, with $1.18 billion in net outflows recorded over the week ending August 18. Ethereum ETFs similarly faced pressure, with a record $197 million in outflows on August 18 alone [2].

Despite these outflows, corporate treasuries have absorbed much of the selling pressure. Companies such as SharpLink Gaming, Bitmine Immersion Technologies, and BTCS have expanded their Ethereum holdings, with total on-chain treasury balances exceeding $10 billion. Institutional support has helped maintain structural demand, even as the broader market experiences caution. Ethereum’s performance has outpaced Bitcoin, with the asset reaching a new all-time high of $4,958.70 on August 24 and demonstrating its growing appeal as a liquidity driver in institutional markets [2].

Bitfinex analysts have noted that the current market environment is marked by a “softer appetite for risk” and a muted trajectory for capital inflows. The analysts predict that a broad-based altcoin rally, or “altseason,” is unlikely to materialize until new investment vehicles, such as crypto ETFs offering exposure to altcoins, are introduced. These products are expected to create sustained, price-agnostic demand, which could foster a broader re-rating across the digital asset market [3].

The potential for an altseason is further complicated by Bitcoin’s dominance in the market. Currently, Bitcoin’s dominance stands at 58.58%, but analysts have warned that this figure could drop significantly, potentially to as low as 35%, triggering a major shift in capital allocation. Historical patterns suggest that each time Bitcoin’s dominance closes below the 21-week EMA, it has led to sharp declines. A drop to 35% could result in one of the strongest altcoin seasons in history, with capital rotating into Ethereum and high-risk altcoins [4].

Federal Reserve Chairman Jerome Powell’s recent dovish remarks at the Jackson Hole symposium provided a short-term boost to risk assets, including cryptocurrencies. However, Powell stopped short of committing to a September rate cut, emphasizing the Fed’s balancing act between inflation and employment. This cautious stance has tempered expectations of aggressive rate cuts, which could prolong the current period of consolidation for Bitcoin while institutional demand for Ethereum continues to grow [1].

With global liquidity conditions still supportive, the long-term outlook for digital assets remains positive. The combined M2 money supply from major central banks is approaching $100 trillion, reinforcing the structural upward trend in global liquidity. However, capital allocation has become more selective, with investors favoring assets that offer stronger returns and clearer investment vehicles. Bitfinex expects Bitcoin to remain range-bound in the near term, while Ethereum and other altcoins attract increasing institutional interest [2].

Source:

[1] Bitfinex Alpha | ETH Climbs as BTC Consolidates (https://blog.bitfinex.com/bitfinex-alpha/bitfinex-alpha-eth-climbs-as-btc-consolidates/)

[2] Bitcoin consolidates as liquidity flows shift to Ethereum and broader altcoins (https://cryptoslate.com/bitcoin-consolidates-as-liquidity-flows-shift-to-ethereum-and-broader-altcoin-markets/)

[3] Altcoin season won't start until more crypto ETFs launch: Bitfinex (https://cointelegraph.com/news/altcoin-season-crypto-etfs-factor-may-delay-analysts)

[4] Bitcoin Dominance Could Drop to 35%, Analyst Warns (https://cryptodnes.bg/en/bitcoin-dominance-could-drop-to-35-analyst-warns)

[5] $1.6b pulled from crypto ETFs as correction looms (https://www.afr.com/markets/currencies/1-6b-pulled-from-crypto-etfs-as-correction-looms-20250821-p5momr)