BTC Pullback Spurs Rotation to ETH: ETF Flows & On-Chain Signals
In August 2025, a Bitcoin pullback from around $123,000 coincided with whale-led exchange deposits and Bitcoin ETF net outflows totaling $233.57 million. Simultaneously, Ethereum ETF inflows surged to approximately $2.9 billion, including a single-day record of $299.93 million led by BlackRock iShares.
On-chain data validates this institutional rotation: Bitcoin pullback pressure manifested as a 36% jump in retail selling and elevated large BTC transfers to exchange custody. In contrast, Ethereum’s network activity grew, with higher transaction counts, gas usage, and Layer 2 throughput, while major wallets continued steady ETH accumulation.
Macro catalysts played a key role. The Federal Reserve’s dovish stance at Jackson Hole reignited risk appetite, directing capital into growth-focused crypto assets like Ethereum. Traders should monitor ETF flows, exchange custody shifts, and Layer 2 adoption for signs of further rotation and consider tactical portfolio rebalancing in light of short-term BTC weakness and renewed conviction in ETH.
Bullish
The reported rotation from Bitcoin to Ethereum signals a shift in institutional preference, driven by substantial ETH ETF inflows (~$2.9 billion) contrasting with $233.57 million of BTC ETF outflows. Historically, such ETF flow imbalances have preceded strong price moves—Bitcoin ETF outflows in early 2022 foreshadowed its subsequent correction, while significant ETH inflows around the Shanghai upgrade in 2023 preceded an ETH rally. On-chain evidence further supports this trend: heightened Bitcoin exchange deposits and retail selling mirror past sell-off capitulations, whereas growing Ethereum transaction volume, Layer 2 adoption, and wallet accumulation echo previous accumulation phases before major bullish runs.
In the short term, traders may see continued BTC price pressure as liquidity drains from spot and ETF products. Conversely, Ethereum is likely to benefit from renewed institutional conviction, potentially driving upside momentum. Over the longer term, sustained ETF inflows, coupled with network growth catalysts, could cement a bullish outlook for ETH against a relatively neutral to negative backdrop for BTC, suggesting tactical overweighting of ETH in diversified portfolios.