Digital Asset Market Update: Ether Reclaims $3,500, Bitcoin Remains Subdued

The digital asset market saw a positive uptick during the European morning, with ether making a strong comeback to reclaim $3,500. ETH has surged over 4% in the last 24 hours, currently trading at $3,540. The CoinDesk 20 Index (CD20) also saw a gain of around 1.6%, indicating a broader market trend.

Despite a recent slump, DOGE is up nearly 3.5% while meme coin SHIB has also seen a rise of over 3%. On the other hand, Bitcoin remains relatively subdued, hovering around $65,400 with a modest 0.2% increase from the previous day. However, spot bitcoin ETFs in the U.S. experienced significant outflows of $152.4 million on Tuesday.

Wallets tracked by CryptoQuant revealed that whales have sold over $1.2 billion worth of BTC in the past two weeks. This lack of demand from long-term bitcoin holders suggests a continued absence of upside potential for the cryptocurrency. Analysts noted that traders are not increasing their bitcoin holdings, and large holders’ demand growth remains weak.

Market observers speculate that crypto miners may be shifting their focus to the booming AI sector instead of bitcoin, leading to a sell-off of their bitcoin rewards. Both industries heavily rely on powerful computing chips for data generation and maintenance.

In a contrasting view, broker Bernstein believes that Bitcoin and crypto-linked stocks are currently undervalued and ripe for institutional adoption. Despite recent disappointments, Bernstein predicts that major wirehouses and large private bank platforms will approve ETFs in the second half of the year. The report anticipates a surge in Bitcoin ETF inflows in the third and fourth quarters, driven by large advisers approving ETFs and reallocating funds from existing portfolios.

Bernstein has given outperform ratings to bitcoin-adjacent publicly traded firms such as MicroStrategy, Robinhood, Riot Platforms, and CleanSpark, suggesting that these companies may benefit from the next wave of institutional adoption in the crypto market.