A large amount of Bitcoin sold during low liquidity has caused volatility in the cryptocurrency market, weakening Bitcoin's strength against Ethereum's rise.
Strong movements from institutional investors reflect a trend change, as Ethereum is gradually gaining an edge over Bitcoin in the short term, while showing that funds and whales are adjusting their investment portfolios smartly.
MAIN CONTENT
Approximately 24,000 Bitcoins (~2.7 billion USD) were sold by a long-term holder during a low liquidity period.
A strong upward trend in Ethereum while Bitcoin loses strength, with capital shifting from Bitcoin to Ethereum.
Institutional investors are adjusting their portfolios, reducing their Bitcoin holdings and increasing their Ethereum holdings, causing Bitcoin's dominance to drop from 60% to 57%.
How has Bitcoin been affected by large sell-offs in low liquidity periods?
When a long-term Bitcoin holder sells around 24,000 Bitcoins, equivalent to approximately 2.7 billion USD, during a low liquidity market, this has created a shock that sharply pulls down Bitcoin's price. This event occurred on a Sunday, right after a short-term increase created at the Jackson Hole conference.
As a result, a rapid flash crash occurred, wiping out approximately 500 million USD in leveraged positions on the market within minutes. Previously, Bitcoin traded within a narrow price range and did not experience much strong movement, but this large-scale sell-off disrupted Bitcoin's market stability.
The impact of the sell-off highlights Bitcoin's sensitivity to liquidity, especially when a large supply is released simultaneously, putting significant pressure on prices.
Why is Ethereum rising sharply while Bitcoin loses strength?
Ethereum continues to set new price highs as investors shift capital from Bitcoin to Ethereum. This increase is driven by Bitcoin transfers from long-term wallets to Ethereum, causing the exchange rate to exceed 0.04.
Behind Ethereum's impressive price increase is the growing accumulation from institutions like BitMine, which has improved liquidity and supported price momentum. This trend reflects the increasing interest of institutional investors in Ethereum.
At the same time, continuous outflows from Bitcoin investment funds (ETFs) over six consecutive days, totaling approximately 1.2 billion USD, have created downward pressure on Bitcoin and provided opportunities for Ethereum to grow.
What causes the change in ownership proportions between Bitcoin and Ethereum?
As Bitcoin ETF funds continuously record net outflows, institutional investors have reduced their Bitcoin dominance from 60% to 57%, while increasing their Ethereum holdings.
Data shows that this is the first time in a long while that Bitcoin has lost significant ground to Ethereum, despite still being above the 50% mark like in the 2021 altcoin season. This stimulates predictions that whales and large funds expect Ethereum to outperform in the near future.
If an ETF based on collateralized Ethereum is licensed this year, it further strengthens the view that Ethereum will rise even more robustly.
"The capital shift from Bitcoin to Ethereum is creating a structural change in the market, reflecting institutional investors' long-term growth expectations."
- Market analysis report, QCP Capital, August 2023
How will the market develop in the near future?
Although Bitcoin is under pressure in the short term, the fundamental view remains unchanged for this asset. The sharp drop in July when the market absorbed about 80,000 excess Bitcoins shows Bitcoin's resilience and recovery capability.
Institutional investors are expected to continue buying Bitcoin when prices adjust downward, showing selectivity and caution in investment. This reflects a balance between the current fluctuations and Bitcoin's sustainable growth potential.
What actions have institutional funds taken with Bitcoin and Ethereum?
In August, investment funds reduced their Bitcoin purchases compared to previous months while increasing their Ethereum purchases, aligning with the trend of capital shifting. The net outflow from Bitcoin ETF funds also indicates a change in sentiment as institutions prioritize assets with higher growth potential.
This creates supportive momentum for Ethereum, helping this cryptocurrency maintain its upward trend and attract more large investors in the market.
How do institutional investors influence the cryptocurrency market?
Institutional investors play a crucial role in regulating supply and demand in the world's largest cryptocurrency market. They have the capacity to buy or sell in large volumes, causing rapid price volatility during periods of low liquidity while shaping long-term trends.
The capital shift from funds and whales from Bitcoin to Ethereum is evidence of how institutions respond flexibly and predict market trends based on in-depth analysis. They also provide liquidity and confidence in the cryptocurrency market.
Frequently Asked Questions
How long can large sell-offs of Bitcoin affect prices?
Large sell-offs in low liquidity conditions often lead to short-term price volatility, but institutional investors tend to buy when prices drop, stabilizing the market in the medium to long term.
Why is Ethereum attracting capital inflows from institutional investors?
Ethereum is highly valued due to its wide application potential and the development of financial products based on it, along with expectations of the upcoming approval of the Ethereum ETF.
Will Bitcoin lose its dominant position in the cryptocurrency market?
Bitcoin still maintains its dominant position; however, the declining dominance ratio indicates that the balance between cryptocurrency assets is gradually changing according to market trends.
How do institutional investment funds affect the price volatility of Bitcoin and Ethereum?
The buying and selling actions of large funds can create significant leverage, causing sharp price fluctuations in the short term and directing long-term trends.
How will the prices of Bitcoin and Ethereum develop in the near future?
Bitcoin can maintain stability with buying pressure influenced by declining cyclos, while Ethereum is expected to continue growing due to institutional investor interest.
Source: https://tintucbitcoin.com/nha-dau-tu-lon-ky-vong-eth-vuot-btc/
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