Recently, there has been significant differentiation in the cryptocurrency ETF market: Bitcoin and Ethereum related products have seen significant net outflows, while various altcoin ETFs, especially the XRP ETF, continue to attract institutional funds, indicating a significant adjustment in capital structure. Mainstream assets have seen clear outflows:
The Bitcoin spot ETF saw a net outflow of approximately $195 million on December 5, marking one of the weakest performances in recent weeks. The Ethereum ETF also recorded significant net outflows at that time, contrasting sharply with BTC and ETH's pressure, while the XRP ETF maintained net inflows for several weeks, accumulating nearly $900 million, indicating that institutions' confidence in its relative value and potential regulatory benefits continues to strengthen.
Is this phenomenon a short-term hedging behavior or a fundamental shift in institutional allocation logic? How should ordinary investors respond?
MyToken recently held a special AMA, inviting several industry experts for an in-depth interpretation of this. Below is a review of the core viewpoints discussed.
Guest introduction
The Bull Demon King (@Btcniumowang): A senior analyst and KOL in the cryptocurrency field, focusing on primary and secondary market research, with unique insights into market structure and capital flow.
Christina (@ChristineKTX): CMO of KTX Exchange, which recently launched on-chain trading tools, dedicated to empowering retail investors with data.
Evan (@ChainThink_zh): A researcher at ChainThink blockchain media, focusing on market data analysis and industry trend interpretation, skilled in analyzing capital movements from macro and on-chain perspectives.
Summary of opinions
1. Capital flow differentiation: Short-term rotation or long-term turning point?
The three guests unanimously believe that the recent capital flow from mainstream coin ETFs to altcoin ETFs such as XRP is more a result of short-term market rotation and macro hedging rather than a fundamental shift in institutional allocation logic towards crypto assets.
The Bull Demon King pointed out that at the end of the year, institutions tend to lock in profits and balance positions. Bitcoin and Ethereum, as highly liquid assets with strong macro correlation, naturally become targets for portfolio adjustment. At the same time, the market is looking for the next potential ETF hotspot, and assets like XRP are attracting capital due to regulatory progress and independent narratives.
Christina represents an exchange that values user experience and transparency. She added that institutions will choose assets with stronger narratives and regulatory backing under macro uncertainty. XRP's dynamics in payments and DeFi have made it a focal point of recent capital attention.
Evan analyzed from the perspective of market cycles, stating that Bitcoin's recent gains are relatively sufficient, with Bitcoin's volatility decreasing year by year. Some profit-taking funds are turning towards lower-valued altcoins with fundamental support to seek higher alpha returns. However, this is still 'tactical rotation', and the benchmark status of Bitcoin and Ethereum remains unchanged.
2. Will this become the norm? What impact will it have on market structure?
Guests generally believe that the capital rotation model of 'exit mainstream, not exit the market' may become more normalized in the future, and will further drive the market valuation system to stratify.
The Bull Demon King metaphorically said that Bitcoin is like the 'S&P 500', more influenced by macro conditions; while XRP, Solana, etc., are like 'growth stocks', relying more on project fundamentals and narratives. The market will become more structured, with sector rotation becoming more precise and cycles shorter.
Christina stated that as the market matures and institutions delve deeper, capital will continuously seek the next growth point. She is optimistic about directions with real business models such as payments, on-chain credit points, and RWA (real-world assets).
Evan pointed out that the total market value of cryptocurrencies has become enormous, making it difficult for funds to support a broad bullish market. Future institutional allocation will focus more on a combination of 'mainstream coins + quality altcoins' to balance risk and return.
3. How should retail investors respond?
Faced with the capital rotation led by institutions, how should retail investors rationally view and utilize this institutional capital rotation? Should they quickly switch positions following the flow, or stick to core allocations and ignore short-term noise? What aspects should be paid attention to? On this, the guests also expressed their respective views.
The Bull Demon King suggests that retail investors should remain rational and avoid blindly following trends. Maintain 70%-80% core positions in mainstream assets like Bitcoin and Ethereum, and allocate a small portion to promising narrative tracks. Avoid emotional chasing and panic selling.
Christina emphasized that retail investors are at a disadvantage in terms of information and data, and can use tools (such as the on-chain signal product that KTX is about to launch) to track capital flows. For allocation, mainstream assets should be the base, with a small portion of funds invested after in-depth research into potential tracks.
Evan illustrated with vivid examples from friends following Duan Yongping that there is a huge difference in the volume of funds and risk tolerance between retail investors and institutions, and institutional ETFs may just be replacement actions, thus position management is crucial. High-frequency switching should be avoided, high-yield traps should be heeded, and long-term value and fundamentals of projects should be emphasized.
4. Which tracks continue to attract institutional attention?
The tracks that guests are optimistic about are concentrated in areas with real demand, clear business models, and compliant prospects:
The Bull Demon King: Optimistic about Solana (active ecology, payment potential), RWA (assets on-chain, stable returns), and AI (combination of computing power demand and payment scenarios).
Evan: Payment scenarios (such as U-card applications) and RWA (improving efficiency of illiquid assets) are important directions.
Christina: In addition to payment chains, also focuses on on-chain credit points and mature DeFi protocols.
5. Why is the inflow of XRP ETF funds significant while the price reaction is flat?
Additionally, during the community interaction session, audience users raised the question of why XRP ETF data continues to flow in, but XRP prices are not significantly affected. Evan and the Bull Demon King pointed out that this is mainly due to:
The market's sensitivity to the ETF narrative has decreased, with multiple ETFs leading to diminishing effects.
Some inflows may be institutional positions swapping (converting spot into compliant ETF products);
There exists unlocking pressure and historical trapped positions, suppressing rapid price increases.
Conclusion
This AMA revealed the complexity of the current capital flow in the cryptocurrency market: institutional operations are becoming increasingly refined, there is a game between institutions and retail investors, and the market is shifting from a 'broad bullish market' to a 'structural bullish market'. For investors, understanding the rotation logic, maintaining core allocations, and rationally participating in trends may be key to coping with future markets.
MyToken, as a neutral and comprehensive data platform, continuously provides depth data such as ETF capital flow and on-chain signals to assist investment decisions, market insights, and tool support. This article is based on MyToken's AMA content, and the guests' views are for reference only and do not constitute investment advice.
