As attention shifts to altcoins, Bitcoin (BTC) has experienced a pause in the uptrend that has characterized the past month. Currently trading 3.8% below its record high of $99,540, questions arise about the sustainability of this rally and the potential for a correction as the year approaches.

Investors are increasingly choosing Ethereum and XRP

Chris Newhouse, Director of Research at Cumberland Labs, he noticed that while there remains robust institutional buying pressure – particularly from companies like MicroStrategy that continue to accumulate Bitcoin – there is a noticeable shift in capital flows.

Newhouse noted that the broader cryptocurrency ecosystem is experiencing a “diversification of capital flows” from both institutional and non-institutional participants.

This diversification indicates that as Bitcoin stabilizes, investor interest is increasingly shifting towards other digital assets, including Ethereum (ETH) and XRP, which previously lagged behind Bitcoin.

After the victory of President-elect Donald Trump, who became known as a supporter of cryptocurrencies, expectations for more favorable regulations in the USA increased. This contributed to a mass rally in XRP pricewhich increased by 400% on a monthly basis.

This optimism is also reflected in record monthly net inflows into Bitcoin and Ethereum listed funds (ETF) in November, which reached $6.5 billion and $1.1 billion, respectively. Bloomberg data shows that last Friday saw the highest-ever daily subscription level for the Ether ETF.

$2 Billion Bitcoin Silk Road Moved to Coinbase

The options market has seen a noticeable escalate in Bitcoin’s downside protection at later expirations this month. Meanwhile, BTC futures exhibited moderate leverage, remaining relatively tender after Bitcoin breached the $99,000 mark.

According to Vetle Lunde, head of research at K33, on-chain data suggests that traders who purchased BTC between $55,000 and $70,000 are now actively taking profits. “Profit-taking was particularly intense when BTC traded above $90,000,” Lunde noted.

Jake Ostrovskis, trader at Wintermute OTC, noted that “the market has stalled over the last 10 days as Bitcoin trades just under $100,000. Volatility levels have compressed slightly, with Bitcoin at the 64th percentile and Ether much higher at the 81st percentile.”

This volatility compression suggests cautious sentiment among traders assessing the market’s next moves, with the possibility of a novel wave of lower support levels being tested again on the BTC exchange price actionwhich could jeopardize reaching the $100,000 threshold by the end of the year.

Recent developments deepen market uncertainty reported on Monday by NewsBTC that nearly $2 billion in BTC previously confiscated from the Silk Road marketplace had been transferred from US government wallets to Coinbase.

Such moves often spark speculation among traders, as similar moves by the U.S. government to massively liquidate its holdings contributed to a downtrend in the second and third quarters of the year, with BTC falling by more than 20% in two consecutive months.

At the time of writing, BTC is trading at $94,480, down 0.5% in the last 24 hours.

Featured image from DALL-E, chart from TradingView.com