Key Points
- Ethereum’s performance has been declining against Bitcoin since 2023, indicating a decrease in interest and capital outflows.
- Low Open Interest and emotional exits suggest that Ethereum may be ready for a potential volatile rebound.
Since the 2021–2022 cycle, Ethereum (ETH) had a noticeable edge over Bitcoin (BTC).
This was driven by speculative excitement, significant network enhancements, and increased activity in the derivatives market. Traders were heavily investing in ETH perpetual futures, anticipating its long-term dominance in the DeFi boom and the transition to proof-of-stake.
Ethereum’s Declining Momentum
However, since the beginning of 2023, the ETH/BTC momentum has taken a drastic turn. Ethereum’s weakening performance against Bitcoin indicates a larger shift in market dynamics, characterized by decreasing interest and cautious capital outflows from ETH.
Data paints a clear picture of Ethereum’s weakening position in comparison to Bitcoin. The ETH/BTC price ratio and the perpetual futures open interest ratio have both seen a sharp and sustained decline since early 2023.
By March 2025, Open Interest had dropped to 0.15, and the price ratio had plummeted to just 0.02. This is a clear indication of bearish conviction from leveraged traders.
Emotional Exits and Potential Rebound
The chart not only shows a significant drop in ETH/BTC ratios and Open Interest but also reveals a sense of fear. The sharp decline suggests not only disinterest but also emotionally-driven exits as investors turn to Bitcoin for safety.
Such indifference has often marked pivotal bottoms. Similar phases of capitulation in late 2018 and mid-2020 were followed by explosive Ethereum rallies.
What may now seem like abandonment could be the emotional reset that precedes accumulation. With fewer speculative positions and low liquidity, Ethereum may be primed for volatility. If sentiment changes, even slightly, the rebound could be swift and violent. This downturn might be less of an end and more of a coiled spring.
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 the majority are betting on further downside, only to be surprised 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.
