Bitcoin ETFs Grapple With Outflows as Ethereum ETFs Attract Growing Interest, Sparking Altcoin Season Speculation

Bitcoin ETFs have been grappling with substantial outflows since December 19, with total outflows surpassing $1.1 billion at the time of writing.

US spot Bitcoin (BTC) exchange-traded funds (ETFs) encountered substantial outflows on December 23, totalling $226 million, while Ethereum ETFs experienced inflows of $130 million.

This stark contrast in net flows between the two ETFs has sparked discussions among crypto analysts regarding the possibility of an impending altcoin season.

Capital Flow Shifts from Bitcoin ETFs to Ethereum ETFs

Bitcoin ETFs have been facing significant outflows since December 19, with the total outflows amounting to over $1.1 billion at the time of writing. This trend follows 15 consecutive days of inflows, during which Bitcoin ETFs' total net assets increased from $100 billion to $121 billion.

On December 19 alone, Bitcoin ETFs experienced outflows of $680 million – the largest single-day outflows since the introduction of Bitcoin ETFs earlier this year – decreasing their total net assets to $105 billion.

A major 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 indicate a shift in investors' sentiment towards the flagship cryptocurrency.

In particular, there seems to be a significant capital reallocation from Bitcoin ETFs to Ethereum ETFs.

Supporting this observation, Ethereum ETFs have been garnering increasing interest, which is reflected in the recent inflow data.

According to figures from SoSoValue, Ethereum ETFs received $130 million in inflows on December 23, the same day that Bitcoin ETFs reported outflows of $226 million.

The rising capital inflows into Ethereum ETFs are not surprising, given the growing institutional interest in the second-largest cryptocurrency by market capitalization.

A recent report highlighted that BlackRock's iShares Ethereum Trust ETF has collected over a million ETH.

Bullish Sentiment for Ethereum Builds Up

Despite Ethereum lagging behind other cryptocurrencies like Solana (SOL), SUI, and XRP for a large part of the year, analysts anticipate that the tides might be shifting in ETH's favour.

One key factor contributing to this optimism is the decreasing Bitcoin dominance, which many perceive as a precursor to the much-anticipated "altcoin season."

Furthermore, bullish technical indicators are fuelling positive sentiment regarding Ethereum's price.

For example, the ETH/BTC trading pair on the daily chart posted a higher low on December 22, signalling a potential trend reversal and possible gains for ETH.

Additionally, weekly net inflows into Ethereum staking contracts have been increasing, indicating that more ETH is being locked up in staking. This reduction in the circulating supply could create upward pressure on Ethereum's price.

However, veteran crypto analyst Ali Martinez anticipates a slight delay in Ethereum's next move up. At press time, ETH trades at $3,363, down 2.7% in the past 24 hours.