In the past year, Ethereum (ETH) has seen its institutional funds grow nearly four times faster than those of Bitcoin (BTC).

Analysts suggest this shift could indicate a growing belief in Ethereum as a primary digital asset, alongside Bitcoin.

Significant Changes in Institutional Allocation

Information from XWIN Research Japan shows that institutions are diversifying their crypto portfolios. Bitcoin fund holdings rose by 36% this past year, totaling approximately 1.3 million BTC, while Ethereum’s growth was far more pronounced, with institutional holdings increasing by 138%, reaching around 6.8 million ETH.

This surge can be attributed to the introduction of spot Ethereum ETFs and Ethereum’s crucial role in decentralized finance (DeFi) and other digital ventures. The ETH/BTC holding ratio has shifted from 3:1 to 5:1, indicating a possible long-term strategic change.

“The continuation of this divergence will depend on ETF flows, on-chain activity trends, and broader liquidity conditions in global markets,” noted the research firm.

A recent study supports this trend, revealing that major Ethereum investors have resumed buying the coin after a period of selling. Tom Lee of Bitmine, one of the largest holders of ETH, stated that the market is positioned for a potential year-end rally, citing reduced excessive leverage.

Market Reactions and Price Overview

While these fund growth figures are promising for ETH, current market prices present a more complex scenario. At the time of writing, Ethereum was trading at $4,114, down 1.8% over the previous day. Analysts like Daan Crypto Trades comment that Ethereum is facing a significant test around its prior cycle highs, suggesting bulls need to maintain a position above $4,100 to build momentum.

On the other hand, Bitcoin was priced at $114,198. Recent spikes beyond $115,000 have raised concerns among analysts. TedPillows pointed out the absence of institutional backing and fresh capital during this jump, labeling it a “liquidity grab.” This aligns with on-chain data from the analyst PelinayPA, noting that fund movements on exchanges are at a near-record low, historically observed before market peaks.

Additional Insights

• Despite ongoing short-term uncertainty, the sheer volume of capital in cryptocurrency markets remains vast. For example, Bitcoin futures volumes on Binance alone struck $543 billion in October, highlighting significant institutional and speculative interest. Observers believe that rising institutional holdings in ETH could solidify foundations for the next stage of market growth.