Ethereum Attracts Inflows after Five-Week Losing Streak

Ethereum enjoyed a much-needed break from outflows last week as interest rate cuts that exceeded expectations triggered increased exposure to risky assets from institutions.

According to CoinShares, large entities added $87 million worth of ETH to their balance sheets last week after five consecutive weeks of selling. Monthly flows still remain negative at $60 million, whereas year-to-date, institutions have bought $765 million.

James Butterfill, head of research for CoinShares, suspects that a combination of interest rate cuts from the Federal Reserve plus the SEC approval of IBIT options is likely fuelling the bullish sentiment – at least for Bitcoin. “Investors have been waiting tentatively for some clarity from the Fed and momentum in the markets,” he told The Defiant.

As for Ethereum (ETH) bucking its trend, the story is a bit different.

“I think for ETH, it's a bit of a causation effect,” said Luke Nolan, research analyst for CoinShares. He explained that the spot ETFs launched “at a pretty tricky time” in the market, with momentum stalling and Grayscale outflows heavily outweighing inflows, much like what occurred with Bitcoin in the early days.

However, while for Bitcoin, a lot of price is driven by flows, it seems that ETH products are the opposite: price drives flows, said Nolan.

Market Down Amid Altcoin Momentum

The cryptocurrency market is bleeding out today, with major cryptocurrencies dropping between 2% and 9%.

That said, it could be only a temporary setback due to flaring geopolitical tensions in the Middle East. If the conflict doesn’t escalate, crypto could resume its upward trajectory.

Nolan pointed out that the ETH / BTC ratio, which has seen Ethereum plummet in value against its digital gold counterpart, has shown “some signs of life following the altcoin momentum of late.” It sits at 0.04024, its lowest level since April 2021.

Bitcoin dominance has been dropping since its mid-September peak. It's now at 53.6%, down from 55%, signalling that investors are beginning to favor altcoins again. This has also likely fuelled large entities leaning into Ethereum more heavily in the past week.

“[Bitcoin Dominance] has taken a very small correction, and it remains to be seen if it will continue its uptrend or if alts will start to outperform for a longer period of time,” said Nolan.