Recently, the cryptocurrency ETF market has shown significant divergence: Bitcoin and Ethereum-related products experienced substantial net outflows, while various altcoin ETFs, particularly the XRP ETF, continued to attract institutional capital, indicating a notable adjustment in fund structure. Outflows from mainstream assets were pronounced:
Bitcoin spot ETFs saw a net outflow of approximately $195 million on December 5th, marking one of the weakest performances in weeks. Ethereum ETFs also recorded significant net outflows at the time. In contrast to the pressure on BTC and ETH, the XRP ETF maintained net inflows for several consecutive weeks, with total inflows approaching $900 million, demonstrating sustained and growing institutional confidence in its relative value and potential regulatory benefits.
Is this phenomenon a short-term risk-off behavior or a fundamental shift in institutional allocation logic? How should retail investors respond?
MyToken recently hosted a thematic AMA, inviting several industry experts to provide an in-depth interpretation. Below is a recap of the core viewpoints from the discussion.
Guest Introductions
Niu Mowang (@Btcniumowang): Senior crypto analyst and KOL, focused on primary and secondary market investment research, with unique insights into market structure and fund flows.
Christina (@ChristineKTX): CMO of KTX Exchange. KTX Exchange recently launched on-chain trading tools, committed to providing data empowerment for retail investors.
Evan(@ChainThink_zh): Researcher at ChainThink blockchain media, specializing in market data analysis and industry trend interpretation, skilled at dissecting fund movements from macro and on-chain perspectives.
Viewpoint Summary
1. Diverging Fund Flows: Short-Term Rotation or Long-Term Shift?
The three guests unanimously agreed that the recent flow of funds from mainstream coin ETFs to altcoin ETFs like XRP is more a result of short-term market rotation and macro risk-off sentiment combined, rather than a fundamental change in institutional logic for crypto asset allocation.
Niu Mowang pointed out that institutions tend to lock in profits and rebalance their portfolios at year-end. Bitcoin and Ethereum, being highly liquid assets with strong macro correlations, naturally become targets for adjustment. Simultaneously, the market is searching for the next potential ETF hotspot, with assets like XRP attracting capital allocation due to regulatory progress and independent narratives.
Christina, representing an exchange focused on user experience and transparency, added that institutions, amid macro uncertainty, choose assets with stronger narratives and regulatory backing. Dynamics in the payments and DeFi sectors have made XRP a recent focus for funds.
Evan analyzed from a market cycle perspective, noting that Bitcoin's gains in this cycle are relatively full, and its volatility has decreased year by year. Some profit-taking funds are转向 (turning to) lower-valued altcoins with fundamental support seeking higher alpha returns. However, this remains a "tactical rotation," and the benchmark status of Bitcoin and Ethereum remains unchanged.
2. Will This Become the Norm? What Impact on Market Structure?
The guests generally believe that the model of "exiting mainstream, not exiting the market" fund rotation may become more normalized in the future and will further promote a stratified market valuation system.
Niu Mowang analogized that Bitcoin is like the "S&P 500," more influenced by macro factors, while XRP, Solana, etc., are like "growth stocks," more reliant on project fundamentals and narratives. The market will become more structured, with more precise and shorter sector rotation cycles.
Christina stated that as the market matures and institutions delve deeper, funds will continuously seek the next growth point. She is optimistic about directions with real business models, such as payments, on-chain credit scoring, and RWA (Real World Assets).
Evan pointed out that the total cryptocurrency market capitalization is already massive, making it difficult for funds to support a broad-based rally. Future institutional allocation will focus more on a "mainstream coins + quality altcoins" portfolio to balance risk and return.
3. How Should Retail Investors Respond?
Facing institution-led fund rotation, how should retail investors rationally view and utilize this rotation? Should they follow the flow and quickly switch positions, or stick to core allocations and ignore short-term noise? What aspects need attention? The guests shared their views on this.
Niu Mowang advised retail investors should remain rational and avoid blindly following trends. Maintain 70%-80% core allocation in mainstream assets like Bitcoin and Ethereum, and use the remainder for small allocations to promising narrative tracks. Avoid emotional chasing of pumps and dumping.
Christina emphasized that retail investors are at a disadvantage regarding information and data. They can use tools (like the on-chain signal product KTX is about to launch) to track fund flows. Allocations should be based on mainstream assets, with a small portion of funds invested in potential sectors after thorough research.
Evan used a vivid example of a friend following Duan Yongping to illustrate the vast differences in capital size and risk tolerance between retail investors and institutions. He noted that institutional ETF flows might just be置换 (replacement/swapping) behavior. Therefore, position management is crucial. Avoid high-frequency switching, be wary of high-yield traps, and value the long-term worth and fundamentals of projects.
4. Which Sectors Continue to Attract Institutional Attention?
The guests' favored sectors concentrate on areas with genuine demand, clear business models, and compliance prospects:
Niu Mowang: Bullish on Solana (active ecosystem, payment potential), RWA (asset tokenization, stable yields), and AI (combination of computing demand and payment scenarios).
Evan: Payment scenarios (like U-card applications) and RWA (improving efficiency of illiquid assets) are important directions.
Christina: Besides payment chains, also关注 (pays attention to) on-chain credit scoring and mature DeFi protocols.
5. Why Significant XRP ETF Inflows But Muted Price Reaction?
Furthermore, during the community Q&A session, a listener asked why XRP ETF data shows continuous inflows, yet the XRP price remains relatively unaffected. Evan and Niu Mowang pointed out this is mainly due to:
Reduced market sensitivity to the ETF narrative, with effects diminishing after multiple ETFs;
Some inflows might be institutional position置换 (swapping/replacement) (converting spot holdings into compliant ETF products);
Existence of unlock selling pressure and historical bag holders, suppressing rapid price appreciation.
Conclusion
This AMA revealed the complexity of current cryptocurrency market fund flows: institutional operations are becoming increasingly refined, there is a game between institutions and retail investors, and the market is shifting from a "broad bull market" to a "structural bull market." For investors, understanding the logic of rotation, maintaining core allocations, and rationally participating in trends might be the key to navigating the future market.
MyToken, as a neutral and comprehensive data platform, continuously provides in-depth data such as ETF fund flows and on-chain signals to aid investment decisions, market insight, and tool support. This article is compiled based on the MyToken AMA content; guest opinions are for reference only and do not constitute investment advice.
