Divergence in Flow Data Raises Eyebrows

The crypto market is showing cautious movement as investors gear up for signals from the Federal Reserve’s Jackson Hole symposium.

Against this backdrop, Ethereum is seeing continued outflows tightening its market supply, which contrasts with Bitcoin’s unchanged reserves and ongoing sell-side liquidity.

Diverging Flows Between Bitcoin and Ethereum

There has been a growing divergence between Bitcoin and Ethereum. According to CryptoQuant, this indicates different market trajectories for the two leading cryptocurrencies. Bitcoin’s exchange reserves remain largely unchanged at around 2.53 million BTC, despite recent price swings.

Typically, falling reserves indicate that coins are being moved off exchanges into long-term storage, which eases selling pressure. The current stability in BTC reserves implies that a significant portion of supply remains liquid and available for sale. This, combined with Bitcoin’s pullback from $123,000 to near $113,000, points to potential short-term correction risks for the world’s largest cryptocurrency.

Ethereum, on the other hand, is continuously seeing net outflows from exchanges. Late July and mid-August saw multiple spikes of more than 300,000 ETH moved off exchanges, which reflects coins being transferred to cold storage, staking, or institutional custody.

These outflows reduce available supply on the open market and coincide with ETH trading in the $4,150-$4,400 range, and hence, support a bullish narrative driven by potential supply tightening.

Bitcoin’s stable exchange balances hint at caution and lingering sell-side liquidity, while Ethereum’s declining reserves signify growing long-term positioning and institutional interest. Market observers note that this behavior could drive capital rotation, with ETH showing stronger short- to medium-term bullish momentum relative to BTC.

Investors may view dips in BTC as potential entry points, whereas ETH flows indicate potential for growth.

Adjusting Portfolios Amid Diverging Trends

In a rare portfolio pivot, a Bitcoin whale who held the cryptocurrency for seven years has sold a portion of its stash to bet big on Ethereum. Lookonchain reported that the whale sold 670 BTC for $76 million on August 20, and converted the proceeds into four ETH positions of 68,130 coins. The whale’s original 14,837 BTC, which were accumulated through Binance and HTX years ago, was worth over $1.6 billion.

Most ETH positions were opened with 10x leverage around $4,300, while a smaller 2,449-ETH stake used 3x leverage. After execution, ETH’s price briefly slipped to $4,080, which pushed three positions into the red and close to liquidation at $3,699, $3,700, and $3,732.