Institutional Investors: Why Are They Ditching Ethereum and Only Scooping Up Bitcoin?

▲ Ethereum (ETH) and Bitcoin (BTC) ©Godasol

Although institutional investors' funds are flowing back into the virtual asset market, their attitudes towards Bitcoin (BTC), the leading cryptocurrency, and Ethereum (ETH), the leading altcoin, are starkly divided. Bitcoin is breaking through major resistance levels and attracting strong buying interest, while Ethereum is suffering from continuous selling pressure from institutions, unable to escape its structural weakness.

According to the cryptocurrency media outlet Bitcoinist on May 9 (local time), MorenoDiV, an analyst at the virtual asset analysis platform CryptoQuant, diagnosed this polarization phenomenon by analyzing institutional investors' fund holdings. Since early February, Bitcoin fund holdings have increased from approximately 1,278,000 units to 1,370,000 units, recording a net accumulation of over 92,000 units. This means that institutional exposure to Bitcoin increased by 7.2% during the market recovery period. In contrast, Ethereum fund holdings decreased from 5,930,000 units to 5,800,000 units during the same period, resulting in an outflow of approximately 127,000 units.

The report pointed out that the divergent movements between the two assets are not a mere coincidence. The analysis suggests that institutional positioning is not passively reacting to price fluctuations but actively shaping the market structure. Indeed, Bitcoin quickly regained institutional trust by firmly establishing its identity as a macro reserve asset within the virtual asset ecosystem, based on its deepest liquidity and systematic exchange-traded fund infrastructure.

In contrast, Ethereum is classified as a higher-risk asset than Bitcoin in institutions' risk hierarchy. During times of increasing uncertainty, institutional funds have consistently shown a tendency to maintain or increase their relatively safe Bitcoin exposure while reducing their Ethereum exposure first. In other words, the market recovery since the October crash is not a general recovery of trust but a selective recovery where capital is concentrated only on assets deemed to be of lower risk.

This structural underperformance of Ethereum is clearly evident in the Ethereum price ratio chart against Bitcoin. Currently trading around 0.0285, this ratio has maintained a clear downtrend since mid-2022, with continuously lower highs and lows. Although there was a temporary rebound recently in the 0.019 to 0.020 range, it was insufficient to break the overall bearish structure, and price consolidation is currently underway below the downward-sloping 50-week and 100-week moving averages.

Even if a medium-term recovery is attempted in the future, the 0.035 to 0.038 range, which faced strong resistance earlier this year, is expected to act as a strong upper limit. Experts warned that if the current support level of 0.027 to 0.028 breaks, there could be a further decline to the previous cycle low of 0.020. To reverse this prolonged downtrend, Ethereum must firmly reclaim the 0.035 level, but the prevailing assessment is that this will not be easy given the current market structure.

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