Strategic rebalancing is recommended: prioritizing Ethereum for yield, maintaining a smaller Bitcoin position for systemic risk hedging, and monitoring Ethereum's ecosystem for emerging opportunities.

The ETH/BTC ratio has risen to a 2025 high of 0.0368, reflecting a market shift towards Ethereum, which has seen its trading volume nearly tripled against Bitcoin in recent weeks.

Bitcoin experienced significant outflows last week, with over $1 billion exiting Bitcoin ETPs amid macroeconomic concerns, causing its price to fall from $116,000 to $112,000 over three days.

Recent fund flow divergence between Bitcoin and Ethereum indicates shifting investor preferences and perceptions within the crypto market.

Market activity and sentiment in Bitcoin and Ethereum are currently influenced by macroeconomic uncertainty and upcoming U.S. Federal Reserve policy events.

Ethereum's ecosystem, driven by its utility in DeFi, smart contracts, and staking rewards, continues to attract institutional investors, leading to a 3.37% weekly price increase, despite Bitcoin's 4.5% decline.

Bitcoin has experienced a short-term rebound, stabilizing around $116,000 after a sharp correction, with traders watching for a potential short squeeze near $116,500.

The divergence between Bitcoin and Ethereum signals a need for asset allocators to diversify within crypto, using Bitcoin as a macro hedge while exploring higher-risk altcoins like Solana and Cronos.

Caution is evident in the market, with around $500 million in liquidations of long positions over 24 hours, highlighting downside risks amid uncertain sentiment.

Ethereum's derivatives market shows record-high open interest, with institutional demand strong as funds hold about 6.1 million ETH, a significant increase from late 2024.

Speculative traders have established the largest-ever leveraged short position on Ethereum, indicating increased bearish sentiment in the altcoin market.

Overall, the market environment is shaped by macroeconomic factors, speculative positioning, and growing institutional interest in Ethereum.

Despite some recovery following dovish comments from Federal Reserve Chair Jerome Powell, Bitcoin's year-to-date inflows remain only 11% of its total assets under management, reflecting skepticism about its store-of-value role.