Key Points
- Ethereum’s performance against Bitcoin has weakened since 2023, indicating declining interest and capital outflows.
- The current market conditions suggest Ethereum may be primed for a volatile rebound.
Ethereum’s Declining Performance Against Bitcoin
In the 2021-2022 cycle, Ethereum (ETH) outperformed Bitcoin (BTC) due to speculative enthusiasm, major network upgrades, and increased derivatives market activity. Traders heavily invested in ETH perpetual futures, betting on its long-term dominance amid the DeFi boom and the transition to proof-of-stake.
However, since early 2023, the ETH/BTC momentum has significantly reversed. Ethereum’s weakening performance against Bitcoin symbolizes a broader shift in market dynamics characterized by declining interest and cautious capital outflows from ETH.
Long-Term Depreciation Signals in ETH/BTC
Since early 2023, both the ETH/BTC price ratio and the perpetual futures open interest ratio have followed a steep, sustained decline. By March 2025, Open Interest dropped to 0.15 while the price ratio plunged to just 0.02. This is a clear indication of bearish conviction from leveraged traders.
This is not a temporary correction. It signals a deeper shift in market sentiment. Speculators are moving away from Ethereum, and the diminishing Open Interest indicates a collapse in trader confidence.
Fear, Emotion, and the Potential for a Rebound
The sharp decline in ETH/BTC ratios and Open Interest suggests not just disinterest, but emotionally-driven exits as investors seek safety in Bitcoin. Similar phases of capitulation in late 2018 and mid-2020 were followed by significant Ethereum rallies.
What appears now as abandonment could be the emotional reset that precedes accumulation. With fewer speculative positions and low liquidity, Ethereum may be primed for volatility. If sentiment turns, even slightly, the rebound could be swift and violent.
A Setup for Shock Recovery
When markets become overly one-sided, volatility thrives. Ethereum’s current position, with thin liquidity and low Open Interest, creates the perfect setup for a sharp reversal. The “max pain” concept often marks turning points, where most are betting on further downside, only to be caught off-guard by a sudden rally.
If ETH regains momentum, the ETH/BTC ratio could quickly rise back to 0.07. With positioning at extreme lows, even a small shift in sentiment or a BTC cooldown could spark a high-volatility comeback.