Today's price action in the cryptocurrency world has been choppy, with many of the top tokens that investors watch closely seeing big declines over the past day. As of 3:30 p.m. ET on Tuesday, Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH) and Dogecoin (CRYPTO: DOGE) had declined 3.9%, 4.9%, and 5.3%, respectively, over the past 24 hours.

These moves appear to be the result of a shifting narrative in the crypto world. With more investors now focused on the flow of funds into this asset class, more recognition is being placed on the supply and demand of capital flows into this sector.

Accordingly, the capital inflows into spot Bitcoin ETFs, such as the Grayscale Bitcoin ETF (NYSEMKT: GBTC), have become a much more pertinent focal point for Bitcoin and the entire sector in general.

Reports today that this particular spot Bitcoin ETF (and others) saw big capital outflows appear to be driving the majority of the move in these three top cryptos. The Grayscale ETF led the way lower, posting a $643 million outflow on Monday, with more expected to be reported today.

Let's dive into this particular catalyst, as well as some other concerns that investors are pricing into Ethereum and Dogecoin right now.

Why the sentiment shift?

Capital flows into spot ETFs aren't the only story, but they're the major one in the crypto space right now. With various spot Bitcoin ETFs such as Grayscale's seeing record inflows in such a short time, anticipation around a budding supply/demand dislocation in the Bitcoin market forced other speculative retail capital into the sector. For higher-risk assets such as Dogecoin, this led to what can only be described as a hype-driven rally.

There were also some recent comments from Elon Musk about potentially integrating Dogecoin further into the Tesla purchase ecosystem. We'll have to see whether that plays out or not, but it's clear that Dogecoin's primary purpose is to be a speculative trading vehicle for those willing to take abnormally large risks. In this market, that's worked out well for bulls.

For Ethereum, anticipation around pending deadlines for the Securities and Exchange Commission to review spot ETF applications from the likes of Grayscale and others continues to be a driving factor for this token.

That said, if capital outflows from spot Bitcoin ETFs continue, this catalyst could be moot. Thus, investors are undoubtedly going to get ahead of the catalyst by pricing-in expectations, and we'll likely see Ethereum trade somewhat in line with Bitcoin until a decision is handed down.

Where to go from here

Investors who decided to jump on the crypto bandwagon before this flood of speculative capital surged into the sector have certainly done well for themselves. And while we have seen some recent capital outflows from the likes of the Grayscale Bitcoin ETF and others, it's also true that these ETFs have assets under management that many thought they wouldn't at this point in the cycle. So, it's really a matter of perception right now with respect to how the Bitcoin market is finding its balance.

For Ethereum and Dogecoin, I expect to see similar correlation with Bitcoin for some time, until we see the impact of the upcoming Bitcoin halving and potential approvals of spot Ethereum ETFs. Until then, buckle your seat belts -- it's likely going to be a thrilling ride.

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Chris MacDonald has positions in Ethereum. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Tesla. The Motley Fool has a disclosure policy.

Why Bitcoin, Ethereum, and Dogecoin Are Losing Ground Today was originally published by The Motley Fool