A seismic shift in the crypto market: US institutional investors massively liquidating Bitcoin, while Ethereum, Solana, and XRP see record buying volumes. CoinShares suggests that this rotation may redefine BTC's dominance in institutional portfolios post a major liquidity shock.
US institutional investors have unloaded their Bitcoin positions in massive volumes, creating a selling cascade rarely observed this year. This wave of liquidations can be attributed to several converging factors. The liquidity incident on Binance combined with the announcement of a 100% increase in US tariffs on Chinese products has eroded institutional investor confidence.
Year-to-date Bitcoin inflows now stand at $29.3 billion, well below the $41.7 billion recorded for the entirety of 2024. This contraction reflects a profound sentiment shift among fund managers who are reassessing their Bitcoin exposure amid macroeconomic uncertainty.
Paradoxically, trading activity remains exceptionally strong. Weekly volumes for digital asset ETPs have climbed to $51 billion, nearly double the annual weekly average. This increased volatility indicates that the market is experiencing a phase of massive position redistribution rather than simple panic selling.
Ethereum is leading the charge with $205 million in net inflows, as investors capitalize on temporary price weakness to build positions. Interest in ETH has intensified with the launch of a 2x leveraged Ethereum ETP that has attracted $457 million, marking the largest weekly inflows ever recorded according to CoinShares.
Solana and XRP are riding a wave of anticipation tied to the potential launch of their own ETPs. The $156 million captured by SOL and $73.9 million by XRP demonstrate growing appetite for assets perceived as more technologically agile and better positioned to capture growth in the DeFi sector and cross-border payments.
This institutional rotation suggests that the narrative of “Bitcoin as the only legitimate crypto asset” is crumbling. Professional investors are adopting a multi-asset approach, recognizing that different blockchains address distinct use cases. ETH is currently trading around $3,864 (-4.8%), SOL at $183 (-4.78%), and XRP at $2.42 (-1.23%), while Bitcoin oscillates around $107,589 (-3%).
The geographic concentration of outflows reveals major strategic divergences between regions. While US institutions are liquidating, their European and Canadian counterparts are accumulating. Germany recorded $54.2 million in inflows, Switzerland $48 million, and Canada $42.4 million. These incoming flows show that some players view the current correction as a buying opportunity rather than a bearish signal.
The strength of trading volumes despite massive outflows indicates that the market is actively digesting this redistribution. Market makers and algorithmic traders are maintaining liquidity as positions change hands. This dynamic is characteristic of transition phases where market structure reconfigures without collapsing.
The current on-chain positioning of investors strongly contrasts with that of ETP holders. While institutional flows via ETPs remain relatively stable despite outflows, on-chain metrics reveal a more bearish sentiment with increased transfers to exchange platforms. This divergence between institutional and retail behaviors underscores the complexity of the current movement.
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