Investors Shift Capital to Bitcoin as Altcoin Season Stalls

Bitcoin ETF inflows reached a notable milestone last week, logging the strongest weekly inflow of 20,685 BTC since July 22, according to K33 Research. The surge in demand was led by U.S. spot Bitcoin ETFs, which contributed nearly 97% of the inflows, pushing their combined holdings to 1.32 million BTC. Fidelity’s FBTC product was the standout performer, capturing 36% of the total $2.34 billion in inflows. This influx of capital has reinforced Bitcoin’s recent price recovery, with investors accumulating roughly 22,853 BTC in the last 30 days, surpassing the 14,056 BTC mined during the same period.

The renewed inflows are being attributed to growing expectations for a Federal Reserve rate cut, which has spurred investor risk appetite. Analysts at Bitwise Investments suggest that ETF flows have become a significant driver of Bitcoin’s performance, with the percentage of Bitcoin's price movement explained by ETP flow changes reaching a new all-time high. André Dragosch, head of research at Bitwise, noted a “re-rotation” from Ethereum to Bitcoin in investor flows, with Bitcoin ETF inflows outpacing new supply by a factor of 8.93 times. Meanwhile, Ethereum ETF inflows have seen a recent slowdown, with outflows averaging nearly $62 million on Tuesday, signaling a shift in risk sentiment.

Despite the inflow-driven bullish momentum, volatility in both realized and implied terms remains historically subdued. Bitcoin’s seven-day volatility hit an annual low of less than 0.7% last week, with the coin experiencing 11 consecutive days of volatility below 1.3%. Implied volatility, derived from options pricing, remains near multi-year lows, indicating a cautious market environment. K33 analysts noted that with muted trading activity and no major immediate catalysts beyond the upcoming FOMC decision, directional signals are mixed. The CME Group’s FedWatch tool currently shows a 96% probability of a 25-basis-point rate cut, which could further support risk-on sentiment in the crypto market.

The altcoin market, in contrast, has shown limited signs of a broader rally. Exchange inflows for altcoins have remained below 30,000 transactions as of June 2025, with no major sell-off pressure observed. While Bitcoin’s price nears $117,000, altcoins like Ethereum and XRP have struggled to gain traction. Ethereum remains near its $4,500 support level, with a downtrend in its RSI suggesting fading bullish momentum. XRP has shown resilience, with futures open interest remaining above $8 billion, indicating potential for a short-term rebound.

Institutional interest in altcoins is, however, on the rise. Over 30 U.S. altcoin ETF applications have been filed in 2025, with major asset managers like VanEck, WisdomTree, and Franklin Templeton seeking approval for products tracking BNB, XRP, and Avalanche. These developments have raised hopes for an “altcoin summer,” though the CoinMarketCap Altcoin Season Index (ASI) remains at 26, indicating that Bitcoin still dominates investor sentiment. While the approval of spot Bitcoin and Ethereum ETFs has set a precedent, analysts caution that ETF approval does not guarantee price movement, and the broader market still appears in a “Bitcoin season.”