Key Points
- Ethereum failed to follow Bitcoin’s upward trend, indicating a notable divergence.
- The ETH/BTC pair’s performance could dictate the next significant market movement.
Bitcoin has recently shown significant upward movement, with back-to-back breakout candles on the 18th and 19th of May, closing at $107,111. This marked a significant increase above levels not seen since mid-January.
In contrast, Ethereum showed a clear divergence. After a strong rejection at the $2,737 supply zone on the 13th of May, ETH failed to reclaim key structure and has been drifting lower, losing nearly 13% from that local high.
On-Chain Signals Indicate Potential Shift
Typically, smart capital accumulates near local tops, triggering liquidity sweeps by targeting stop-loss clusters. However, current on-chain signals suggest a potential shift toward distribution, with large holders offloading ETH positions.
One example of this is an early dip buyer from May who loaded up at around $1,770 per ETH and just cashed out near $2,440, netting a hefty $3.18 million in realized gains. The resulting deleveraging has been aggressive, with long liquidations accounting for nearly 78% of total wipeouts.
Ethereum’s Relative Strength Weakens
Despite Ethereum’s monthly gains outperforming major assets due to its undervaluation against Bitcoin, weekly charts tell a different story. The ETH/BTC ratio has dropped nearly 11%, indicating weakening relative strength as Bitcoin surges towards a new all-time high.
As Bitcoin consolidates near the $102K resistance zone, strategic dip-buying in Ethereum could trigger short-liquidation cascades and concentrated liquidity sweeps. However, if Bitcoin maintains bullish momentum toward new all-time highs, Ethereum’s relative performance may weaken as smart money reallocates capital.
The unfolding market rotation will be crucial in the coming days. If whales continue to take profits and shift funds into Bitcoin, Ethereum could enter a broader capitulation phase, increasing downside risk.
