- Analysts noted a decline in demand for bitcoin ETFs, coinciding with the fall of the leading cryptocurrency.
- Altcoins show resilience, while Ethereum demonstrates “disappointing dynamics.”
The ongoing decline of Bitcoin since March 14th will test “institutional appetite,” potentially leading to a period of price redistribution across the broader crypto market, according to analysts from Bitfinex Analyst in their weekly report.
Stabilization
Experts believe that intense inflows into spot bitcoin ETFs fueled Bitcoin’s growth. On March 12th, the daily figure exceeded $1 billion.
Two days later, the leading cryptocurrency peaked at around $73,500 before plummeting by 14% to $63,000.
Bitfinex noted a stabilization in bitcoin fund flows since the end of last week, indicating a decrease in new investment inflows. This shift may suggest a leveling off of the initial surge of institutional interest.
“One hypothesis for the slowdown [in inflows] is that traditional investors have become cautious, recognizing the potential for a significant bitcoin correction. Data on flows in the coming week will be crucial for understanding institutional sentiment towards the leading cryptocurrency, especially regarding the recent downturn,” experts emphasized.
Strong Altcoins, Weak Ethereum
Ethereum’s dynamics have often been a harbinger of potential altcoin growth, analysts stated. However, in the current cycle, this correlation has somewhat weakened due to the rising popularity of other first-layer blockchains.
On March 14th, the Total3 index, which tracks the capitalization of all cryptocurrencies excluding Bitcoin and Ethereum, reached a local high of $788 billion.
During the correction, the indicator showed resilience compared to digital gold, noted Bitfinex.
“This trend highlights the diversification of today’s market situation, where altcoins are gaining momentum and attracting significant capital inflows. The current cycle’s peak is now only 6.5% away from the April 2022 high of $837.5 billion. If it surpasses this level, altcoins will enter a ‘mania phase.’ […] This could potentially lead to exponential growth in the sector’s capitalization and investor interest,” researchers added.
The leaders in growth over the past week were TON, NEAR, SOL, AVAX, APT, and BNB.
Regarding the second-largest cryptocurrency by market capitalization, the ETH/BTC trading pair showed “disappointing dynamics,” according to Bitfinex.
Experts observed that the activation of the Dencun update failed to provide sufficient momentum for Ethereum’s price growth. ETH/BTC quotes are moving towards the bear market low of 0.049 BTC, which was already tested on January 9th, shortly before the launch of spot bitcoin ETFs.
“A positive aspect is the strong support for BTC/ETH at this level, and other Ethereum-based projects are performing well. Additionally, on-chain metrics suggest an optimistic narrative for the blockchain,” the report states.
On March 11th, analysts recorded a record outflow of 154,000 ETH from centralized exchanges. This implies a reduction in available supply on CEX, which, amid stable or rising demand, could positively impact the asset’s price, they believe.
Earlier, CryptoQuant reported a reduction in Ethereum issuance to its lowest level since August 2022 following the Dencun launch. Over the past month, ETH market inflows fell to -0.88% compared to the average -0.25% since the implementation of the hard fork The Merge.
Previously, analysts at Standard Chartered raised their 2024 targets for Bitcoin and Ethereum to $150,000 and $8,000, respectively.