Bitcoin hit a new all-time high of $69,255 in early morning trading New York time Friday before quickly slipping below $67,000, according to data from CoinGecko.

Driven by record flows into Bitcoin ETFs, the new peak is the latest sign the entry of BlackRock, Fidelity, and other Wall Street players is transforming digital assets into a new fixture in the capital markets.

But dynamics in a rapidly moving market may change how investors hunt for gains in this cycle.

Slower rotation

In prior crypto bull markets, traders sought to exploit volatility in altcoins as Bitcoin steadily rose. This time around, Bitcoin is being purchased through ETFs — and this may prevent this money from flowing into riskier coins.

“In previous cycles, when the price was rising this quickly, we’d see a quicker rotation from Bitcoin and Ethereum to altcoins,” Quinn Thompson, head of growth at Maple Finance, told DL News.

Bitcoin’s “rapid rise in price has been the result of ETF inflows, and given that that capital stops in a brokerage account and not on an exchange [like Coinbase], the feedthrough to the rest of crypto is a bit slower,” Thompson said.

Setting aside the stratospheric rise of memecoins such as dogwifhat, Bitcoin has led the market in setting record highs.

‘It’s interesting to think of what assets those ETF inflows can acquire.’

—  Quinn Thompson, Maple Finance

And Ethereum is 16% beneath its record high of just over $4,800 in November 2021. Solana, another high performer this year, is still down 42% from its peak as well.

“It’s interesting to think of what assets those ETF inflows can acquire, which would be Bitcoin and crypto-related equities like Coinbase, MicroStrategy, and you’re seeing some bid for those,” Thompson said.

MicroStrategy is up 132% since the Bitcoin ETFs launched, while Coinbase has risen 75%.

Only a matter of time

Regulatory developments and growing interest from retail investors could still drive demand for altcoins.

The US Securities and Exchange Commission is due to respond to several spot Ethereum ETF applications in May.

This could be a catalyst for moves in altcoins, Brian Rudick, a senior strategist at crypto trading firm GSR, told DL News.

“Given the legal precedent set with the spot Bitcoin ETFs requiring like treatment of spot and futures-based applications” the Ethereum ETFs also have a good chance of materialising, Rudick said.

“If spot Ethereum ETFs do come to fruition, Ether is highly likely to outperform and lift other alts in general as well,” he said.

Altcoin outperformance may therefore not be a matter of if, but a matter of when, Coinbase’s head of institutional research David Duong told DL News.

Higher beta

Traders are “already starting to explore under-owned, higher beta” investments, Duong said, referring to altcoins.

“I expect that might really begin to take off as Bitcoin breaches into true price discovery territory.”

Thompson agreed. “Eventually, once people see their Bitcoin gains, they’re going to look further out the risk curve,” he said.

Tom Carreras and Adam Morgan McCarthy are markets correspondents at DL News. Got a tip about altcoins and ETFs? Reach out at tcarreras@dlnews.com or adam@dlnews.com