The crypto rally has stalled, with Bitcoin struggling to challenge the $120K level as institutional investors take profit.
Institutional ETF inflows into Bitcoin have plunged by 80% this week to just $496 million, a sign of cooling demand.
Market focus is now shifting to Ether (ETH), with its capital flows seen as the key to the market’s next move.
The powerful cryptocurrency rally is showing signs of fatigue, with Bitcoin struggling to challenge the $120,000 mark and key indicators pointing to a significant pullback from institutional investors.
As the market enters a tense consolidation phase, observers say the focus is now shifting to Ether (ETH) and whether it has the strength to bring fresh capital back into the fold and reignite the bullish momentum.
After briefly touching new all-time highs last week, the crypto market has entered a period of consolidation, and the underlying data is revealing some cracks in the bullish facade.
Glassnode data highlights a dramatic cooling of institutional interest, with inflows into spot Bitcoin ETFs plunging by a staggering 80% this week to just $496 million.
This was accompanied by a sharp decline in ETF trading volume, which fell to $18.7 billion.
Bitcoin’s spot market sentiment is also showing signs of weakening.
The Relative Strength Index (RSI)—a popular technical indicator used to measure whether an asset is overbought or oversold—has been retreating sharply, underscoring a move away from previously overbought levels.
Taken together, these signals point to a clear, albeit perhaps temporary, institutional withdrawal from the market, raising questions about the potential for further downside.
A tense derivatives market: hedging and profit-taking on the rise
Trading firm QCP Capital has noted similar tensions in the derivatives market.
While funding rates for perpetual futures remain elevated at above 15%, suggesting that some traders are still maintaining aggressive long positions, recent flows indicate that large, sophisticated players are actively taking profits and hedging against potential downside.
QCP, in its recent note, pointed out that a major ETH call fly (a complex options strategy) was recently unwound, while sizeable BTC put options were bought for protection.
This is not the kind of market activity that typically supports a fresh leg up in a rally.
Despite these cautionary signals, QCP remains broadly constructive on the market’s outlook.
“Momentum, narrative strength, and macro tailwinds are still on our side,” the firm wrote in a recent update. “Hodlers and institutions will likely buy the dip, as we saw on Friday.”
The Ethereum litmus test: consolidation, capitulation, or the next leg up?
Market maker Enflux, however, isn’t sounding the alarm just yet. The firm views the current market conditions as a period of healthy consolidation, not a sign of impending capitulation.
They note that spot and perpetual futures markets are essentially treading water, not bleeding out.
The key to what comes next, according to Enflux, lies with Ethereum.
“How institutional ETH flows evolve, and whether capital re-engages with alts, would likely guide the next leg of market structure,” the firm said in a note to CoinDesk.
Ethereum now finds itself at the center of these diverging perspectives.
If institutional investors, who have been stepping back from Bitcoin, decide to rotate their capital back into the crypto market through ETH, it could reignite the altcoin cycle and lift the entire market.
If not, this period of consolidation could harden into something more prolonged and painful.
For now, the rally has paused. Glassnode sees fragility in the current market structure. Enflux sees neutrality. QCP sees a hedged optimism.
But all seem to agree that the next major breakout—or breakdown—will likely be sparked by how capital flows into and out of Ethereum materialize in the coming days and weeks.
Broader market snapshot
BTC: Bitcoin is trading at $118,000, consolidating between channel support at $114,000 and resistance near its all-time high of $123,000.
A recent liquidity sweep below $116,000 and renewed supply from a reactivated whale wallet have stalled its bullish momentum, according to CoinDesk’s market insights bot.
ETH: Ethereum is trading at $3,783, holding a bullish inverse head-and-shoulders pattern that technically targets the $4,300 level.
However, neutral funding rates near multi-year resistance suggest trader caution, even as institutional accumulation continues.
Gold: Gold fell to a near three-week low, with spot prices down 0.7% to $3,313.57.
A recent US-EU trade deal has boosted risk sentiment and temporarily reduced the demand for safe-haven assets ahead of a busy week for corporate earnings and a key US Federal Reserve meeting.
Nikkei 225: Asian markets opened lower, with Japan’s Nikkei 225 down 0.61% as traders adopted a wait-and-see mode to determine if more regional trade deals can be struck.
S&P 500: The S&P 500 ended Monday’s session nearly flat, as the positive news of a US-EU trade deal failed to ignite a significant new rally in U.S. equities.
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