ETH’s Surge: Capital Rotation from BTC or New Money Flooding In? The Real Driver Exposed
Ethereum's blistering rally has traders scrambling—is this just Bitcoin profits doing the cha-cha into ETH, or are fresh billions storming the gates?
Follow the money: The smart money debate
Market whispers suggest two competing narratives: Either crypto's old guard is recycling BTC gains into ETH's DeFi playground, or institutional FOMO is finally kicking down Ethereum's door. Both scenarios spell fireworks.
The cynical take: Wall Street's late as usual
While hedge funds debate 'digital gold 2.0,' ETH's infrastructure quietly ate the financial system's lunch. Now traditional finance wants a seat at the table they mocked five years ago—classic.
What is Driving Ether’s Rally?
This month, ETH has climbed over 60% from $2,400 to $3,850. On the other hand, BTC has increased by 14% from $107,000 to hit an all-time high (ATH) above $123,000. Although BTC declined briefly to the $115,000 zone, it has consolidated mostly between $117,000 and $120,000.
As of July 25, bitcoin reached a new ATH in Realized Cap at $1.018 trillion. This metric represents the market cap of bitcoin by telling the price at which each BTC was last moved on-chain. Hence, it reflects the total acquisition cost of all BTC in circulation, factoring in accumulation trends and large-scale selling.
The increase in Realized Cap indicates that the capital invested in bitcoin is rising, not declining. So, instead of dumping BTC for ETH and other altcoins, investors are allocating fresh capital to their other crypto holdings.
No Major Capital Rotation
Addressing bitcoin’s consolidation concerns, Aleman explained that such price pauses can be attributed to capital accumulation phases that come before exponential rallies. The market has witnessed such dynamics in past bull cycles; this time will be no different.
“So, what’s happening with ETH? The answer is simple: following the Genesis Law, along with the strong growth prospects of the ethereum ecosystem, there has been a surge in capital invested in ETH this July, but without reducing positions in BTC,” the analyst added.
In conclusion, there is no major capital rotation from BTC to ETH. Investors are just injecting new capital through exchange-traded funds (ETFs) and other investment products. Institutional demand for ETH is currently at peak levels, with spot Ethereum ETF purchases accounting for more than the daily production of ether.
Ethereum investment products just recorded their second-largest weekly inflow at $1.59 billion. Inflows into the products this year have exceeded the total recorded in all of 2023.
