ETH/BTC Ratio Mirrors Previous Trends More Than You Might Expect

Key Takeaways

• The ETH/BTC performance has similarities with other cycles.
• ETH/BTC reached a 1,307-day low in November 2024.
• Is the current movement similar to the previous cycles?

Ethereum is still the 2nd biggest cryptocurrency based on its market capitalization. However, its performance in the current market cycle has been underwhelming, because the price has increased by only 240% since the cycle low.

Additionally, the ETH price is 70% below its all-time high, contrasting Bitcoin which reached a new high on Nov. 7. This stark difference is reflected in the ETH/BTC price.

With this in mind, let’s look at the ETH/BTC movement at various times during the previous cycles to see if any similarities arise.

ETH/BTC Since Cycle Low

The ETH/BTC ratio in the current cycle has been unlike previous ones when looking at the performance since the Ethereum/ Dollar cycle bottom in June 2022.

In the first two market cycles (red & blue) Ethereum outperformed Bitcoin in the first year after the cycle low and then began to fall. The cycle highs were reached between 6 and 9 months after the low (blue & red circles)

This changed in the 2019-2022 cycle (green) when Ethereum started to outperform much later, roughly 18 months after the low. Then, the high was reached over two years after the ETH price bottomed.

The current cycle has been unlike any of the other three. Ethereum started to outperform Bitcoin in the first few months after the low but has fallen since. The ETH/BTC ratio is below what it was during the cycle low, something which only briefly happened in the genesis cycle (red) and has not happened since.

The ETH/BTC ratio is below that of June 2022 and has been there for over three months. As of November 2024, it is 0.68 times that of the June 2022 ETH/USD low.

ETH/BTC Since Cycle High

The performance since the Ethereum/USD cycle high in January 2022 paints the current ETH/BTC decline in a better light. This is because ETH/BTC has fallen by 60% since the high, while it did so by 86% at the same time in the previous market cycle (red).

The chart reveals that the ETH price was more resilient during the bear market, falling more in line with the BTC price. However, this has also resulted in a weaker bounce. It contrasts other altcoins such as Solana, which fell over 96% since the all-time high but has increased by 1,760% since.

In the previous cycle, Ethereum started to outperform Bitcoin at a faster pace roughly three years after the previous all-time high, and this performance continued until the next all-time high.

So, judging by this metric, it is still possible that ETH/BTC will mount a rally. On-chain analyst JR  uses the Actual-Value-to-Investor-Value (AVIV) indicator to come to the same conclusion.

Halving Performance is Similar

The metric that shows the most similarities between the market cycles is that of ETH/BTC since the Bitcoin halving. In each cycle, the Ethereum to Bitcoin ratio fell for roughly three to six months before increasing steeply for another three to six months. Sharper declines led to sharper rallies.

The ongoing decline (black) is the longest so far, but not by a lot. If the previous patterns are followed, ETH/BTC will bottom soon and begin a considerable rally.

This increase fits with a fractal from the previous altcoin season tweeted by Charting Guy.  

The highs have been between 500%-100% since those at the time of halving.

If this happens again, the ETH/BTC ratio will reach a new all-time high. Because of diminishing returns, Ethereum may not appreciate as much as it did in the previous cycles. However, even a 100% increase would take the ETH/BTC ratio above the previous cycle’s high at ₿0.088.

Resilience Leads to Weak Bounce

Ethereum has been one of the biggest underperformers in the current market cycle. This has contributed to an extremely negative sentiment around it. This is likely because of its performance relative to Bitcoin when measuring from the ETH/USD market cycle low.

However, when looking at the decline since the high, the ETH/BTC underperformance is more in line with other cycles, and so is the movement since the halving.

As a result, a reason for Ethereum’s underperformance since the cycle low could be its resilience in the bear market after the all-time high, meaning that a weaker drop has resulted in a weaker bounce.

About the Author

Valdrin Tahiri

Valdrin discovered cryptocurrencies while getting his MSc in Financial Markets from the Barcelona School of Economics in 2017. He has been an avid investor and trader since. Valdrin has written for several cryptocurrency media companies such as BeInCrypto and CoinGape.

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