The ETH/BTC ratio, a key measure of Ethereum’s (ETH) strength against Bitcoin (BTC), has stayed below 0.05 for more than a year, highlighting Ethereum’s struggle to gain ground against the largest cryptocurrency even during what many analysts described as an ‘Ethereum season.’
According to Bitget’s Chief Analyst, Ryan Lee, Bitcoin’s role as the market’s ‘anchor asset’ explains why Ethereum continues to lag. He also shared insights on the conditions necessary for ETH to close the gap finally.
Why the ETH/BTC Ratio Remains Depressed After a Year
It’s essential to understand that the ETH/BTC ratio serves as a barometer for investor sentiment. When the ratio rises, it suggests that investors lean towards Ethereum over Bitcoin, often driven by strong demand from developments like staking, DeFi activity, or broader optimism surrounding altcoins. Conversely, a declining ratio indicates Bitcoin is outpacing Ethereum, often owing to a risk-off sentiment among investors who prefer the safety of Bitcoin during turbulent times.
In April, a striking drop in the ratio to a 5-year low highlighted ETH’s struggles, as discussed by BeInCrypto. However, what followed was a noteworthy recovery, with the ratio reaching 0.043 on August 24, coinciding with ETH’s all-time high (ATH).
Yet, despite this record performance, the ratio struggled to breach the 0.05 threshold, a cap last observed in August 2024. As of now, it slightly dipped to 0.038.
What lies behind this persistent lag? According to Ryan Lee, while over $4 billion flowed into Ethereum exchange-traded funds (ETFs) in August, ETH’s relative underperformance underscores Bitcoin’s appeal among cautious investors in a volatile macro environment. This dynamic reinforces Bitcoin’s status as the industry’s ‘anchor asset.’ Conversely, Ethereum’s long-term prospects hinge on the increasing adoption of its DeFi and tokenization ecosystem.
“The ETH/BTC ratio remaining below 0.05 for over a year, even as Ethereum hits record highs and attracts billions in ETF inflows, underscores Bitcoin’s enduring position as crypto’s ultimate store of value,” Lee told BeInCrypto.
Lee further noted that Ethereum’s opportunities to bridge the valuation gap may depend on several factors: quarterly ETF inflows surpassing $9 billion, smooth implementation of forthcoming network upgrades, and significant growth in tokenized assets and DeFi volumes.
“Such catalysts would give ETH a platform to outperform BTC, complementing Bitcoin’s store-of-value narrative with utility-driven demand,” he added.
Lee emphasized that broader macroeconomic conditions will play a pivotal role in shaping the market outlook. The highly anticipated 25-basis-point rate cut from the Federal Reserve may lower borrowing costs and inject liquidity, thereby creating a favorable landscape for risk assets.
In such an environment, predictions suggest Bitcoin could potentially move toward the $150,000–$200,000 range by year-end, while Ethereum may rise to between $5,800 and $8,000, driven by ETF inflows and ongoing network expansion.
“Together, these trends reflect a maturing market where Bitcoin and Ethereum drive industry growth in tandem, provided inflation stays contained and there are no significant geopolitical shocks disrupting sentiment,” Lee commented to BeInCrypto.
ETH/BTC Ratio at a Crossroads: Altcoin Season Ahead or Bearish Breakdown?
As the ETH/BTC ratio remains in limbo, some analysts project an upcoming increase. A recent post on X (formerly Twitter) noted that after a 150% surge, the ETH/BTC ratio has been trading sideways. This analyst suggested that the rally is still intact but anticipates Bitcoin to maintain its lead for a while until Ethereum resumes its upward trajectory, potentially in late October or early November.
Another analyst drew parallels to the 2021 cycle when similar ETH/BTC formations heralded an altcoin season, suggesting that the current trends may allow for a forthcoming rally.
Yet, not all perspectives are optimistic. Analyst Colin Talks Crypto cautioned about a potentially bearish head-and-shoulders pattern developing. If this pattern materializes, it could indicate waning momentum and signify an impending trend reversal, suggesting Ethereum may further lose ground against Bitcoin in the near term.
Presently, the ETH/BTC ratio finds itself at a decisive juncture. While ETF inflows, DeFi growth, and macro liquidity might empower Ethereum to challenge Bitcoin’s dominance, chart patterns and general investor caution indicate ongoing risks. As it stands, the ratio reflects a market weighing whether Ethereum’s utility can eventually eclipse Bitcoin’s entrenched role as the crypto industry’s store of value.