The ETH/BTC ratio, a vital indicator of Ethereum’s (ETH) performance against Bitcoin (BTC), has remained below 0.05 for over a year, underscoring Ethereum’s difficulties in making headway against the leading cryptocurrency, even during what numerous analysts have labeled as an ‘Ethereum season.’
As noted by Bitget’s Chief Analyst, Ryan Lee, Bitcoin’s position as the market’s ‘anchor asset’ sheds light on why Ethereum continues to lag behind. He also discussed with BeInCrypto the necessary conditions for ETH to finally narrow the gap.
Why the ETH/BTC Ratio Remains Depressed After a Year
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The ETH/BTC ratio is a useful gauge for investor sentiment. An increasing ratio indicates that investors prefer Ethereum over Bitcoin, often driven by robust demand for developments like staking, DeFi activities, or overall market optimism in altcoins.
On the other hand, a declining ratio signifies Bitcoin’s outperformance, possibly indicating a risk-off sentiment where investors lean towards Bitcoin’s relative safety or anticipated higher returns.
In April, BeInCrypto highlighted that the metric plummeted to a five-year low as ETH faced pricing challenges. However, a remarkable recovery followed, with the ratio even reaching 0.043 on August 24, aligning with ETH’s all-time high (ATH).
Nonetheless, despite historical performances from ETH, the ratio failed to surpass the 0.05 mark, a level unseen since August 2024. As of this writing, the metric had slightly dipped to 0.038.
What accounts for the lag? According to Bitget’s Chief Analyst Ryan Lee, even with over $4 billion funneled into Ethereum exchange-traded funds (ETFs) in August, ETH’s underperformance underscores Bitcoin’s greater allure for cautious investors in a fluctuating macro climate.
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This reinforces Bitcoin’s standing as the industry’s ‘anchor asset.’ Meanwhile, Ethereum’s future potential hinges on the wider adoption of its DeFi ecosystem and tokenization initiatives.
“The ETH/BTC ratio staying below 0.05 for over a year, despite Ethereum hitting new highs and attracting billions in ETF inflows, highlights Bitcoin’s lasting role as crypto’s premier store of value,” Lee told BeInCrypto.
The analyst indicated that ETH’s prospects for closing the valuation gap may depend on quarterly ETF inflows exceeding $9 billion, smooth implementation of planned network upgrades, and notable growth in the volumes of tokenized assets and DeFi.
“Such catalysts would provide ETH a foothold to outpace BTC, adding utility-driven demand to Bitcoin’s store-of-value narrative,” he said.
Lee emphasized that macroeconomic conditions will significantly affect market prospects. A widely anticipated 25-basis-point rate cut from the Federal Reserve could lower borrowing costs and inject liquidity, thus creating a favorable environment for risk assets.
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In this scenario, Bitcoin could reach the $150,000–$200,000 bracket by year-end, whereas Ethereum might climb to $5,800–$8,000, buoyed by ETF inflows and ongoing network growth.
“Together, these trends signify a maturing market where Bitcoin and Ethereum collaboratively foster industry growth, as long as inflation remains controlled and no significant geopolitical shocks disrupt sentiment,” Lee remarked to BeInCrypto.
ETH/BTC Ratio at a Crossroads: Altcoin Season Ahead or Bearish Breakdown?
Some analysts, however, predict a forthcoming rise in the ratio. In a post on X (formerly Twitter), an analyst noted that following a 150% increase, the ETH/BTC ratio has been moving sideways.
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This analyst believes the rally remains intact but predicts Bitcoin will lead for some time before Ethereum gains traction again, likely around late October or early November.
Another analyst drew comparisons to the 2021 cycle, suggesting that similar ETH/BTC formations indicated an onset of an altcoin season.
However, not all perspectives are optimistic. Analyst Colin Talks Crypto cautioned about a developing head-and-shoulders pattern, which typically signals bearish sentiments. If confirmed, this could indicate diminishing momentum and a possible trend reversal, suggesting Ethereum may cede ground to Bitcoin in the near term.
Therefore, the ETH/BTC ratio stands at a pivotal moment. While ETF inflows, DeFi expansion, and macroeconomic liquidity might provide Ethereum the impetus to challenge Bitcoin’s supremacy, chart patterns and investor caution indicate that risks persist. Currently, the ratio reflects a market still deliberating on whether Ethereum’s utility can outweigh Bitcoin’s anchoring role as the crypto sector’s store of value.
