Ethereum and Bitcoin Rally Together, but On-Chain Data Reveals a Split

Since June 3, Ethereum (ETH) holders have withdrawn 1.4 million coins from exchanges, with the pace picking up after the rally started, according to Santiment.

Bitcoin (BTC) holders, meanwhile, kept their coins on exchanges during the same period. Even though the two largest cryptocurrencies rallied together, their owners acted differently.

Ethereum and Bitcoin Exchange Balances Diverge as Prices Rise

Santiment reported that the amount of ETH on exchanges dropped from around 7.69 million on June 3 to 6.28 million by August 27, a reduction of 18% in tradable supply.

Over the same timeframe, Bitcoin's exchange holdings increased by 0.25%. Santiment says current BTC holdings on exchanges are near the top of their recent range.

Remarkably, withdrawals continued even after the rally began. An additional 275,000 coins left exchanges after August 19, bringing holdings to the lowest level in the period.

The firm added that Ethereum's price rose roughly 27% between August 16 and August 27. Thus, investors moved coins off exchanges while the price was climbing, not falling.

So far in August, Bitcoin has gained 26.5% and Ethereum 34.5%. Neither asset was declining when their holders made opposite decisions.

Meanwhile, Bitcoin's exchange share fell to 6.50% of total supply on July 28, then rose to about 6.65%. Ethereum's share stands at 3.717%. Santiment put the divergence bluntly.

“Two majors, one market, opposite inventory. ETH holders took their coins home. BTC holders left them on the desk,” the firm said.

ETF Flows Reflect the Same Divergence

The same pattern appears in fund flows. Over the past 12 weeks, institutional money did not treat the two assets alike.

US spot Ethereum ETFs saw net inflows of $1.633 billion over 60 trading sessions, while Bitcoin ETFs attracted $173 million.

That gap is even larger than the raw numbers suggest. When the period began, Bitcoin's ETF complex was eight times bigger, so the totals are on very different scales.

The Bitcoin figure also hides significant two-way flow. The funds took in $5.87 billion and returned $5.69 billion, ending near their starting point.

Ethereum's flows, however, were mostly one-way. Its intake represents 15.51% of the assets its funds held before the window, compared to 0.2% for Bitcoin.

Since June 3, Ethereum has risen 34.74%, while Bitcoin has gained 11.91%. September flow data will reveal whether the inventory gap persists.