A compilation of various indicators shows that ETH is nearing a breakout point, however, on-chain data presents a less optimistic picture, disrupting the potential to repeat historical trends.
Currently, ETH is at its lowest valuation relative to Bitcoin in many years, clearly reflected in the MVRV ratio of the ETH/BTC pair — this low level was last recorded in 2019.
In previous cycles (2017, 2018, and 2019), similar conditions led to strong growth phases for Ethereum, with ETH outperforming BTC for several consecutive months. These reversals were often triggered by speculative capital inflows and a strong shift towards altcoins.
However, the current cycle presents a different picture. Although ETH is undervalued, structural barriers are creating uncertainty, weakening ETH's ability to repeat mean-reversion patterns as before.
Unlike previous phases, the dominant narrative now revolves around BTC — supported by capital inflows from ETFs and institutional buying, making ETH's market-leading role less pronounced than before.
The current divergence suggests that although history has supported the possibility of ETH making a strong recovery, that scenario will be difficult to repeat if the fundamental indicators do not improve significantly.
Rather than relying entirely on historical precedents, investors should combine on-chain signals with the current market context to more realistically assess the potential for leading a new altcoin season driven by ETH.
What could hinder ETH from outperforming BTC?
Ethereum's supply has just surpassed 120.7 million ETH, setting a new historical high — a potential sign of increasing selling pressure amidst a lack of balancing factors like a strong burn mechanism or sufficiently high absorption demand.
In previous cycles, supply scarcity played a crucial role in driving up ETH prices. However, in the current context, inflationary pressures and a declining burn rate are weakening that momentum, putting ETH at risk of lagging behind Bitcoin in growth performance.
With the burn fees significantly reduced, the total supply of ETH is no longer decreasing.
Additionally, the level of Ethereum network usage has largely stagnated since 2021. Key metrics such as the number of active addresses and transaction volume do not show a trend of sustainable growth, reflecting a slowdown in the adoption and expansion of the platform's practical utility.
The lack of on-chain explosions also means that ETH is lacking the intrinsic momentum to create natural demand — a factor that played a significant role in helping ETH outperform BTC in previous cycles.
From an investor's perspective, sentiment shows signs of shifting towards caution. Demand to hold ETH at the institutional level is declining: staking rates are stagnating, while holdings of ETFs and specialized investment funds are also decreasing — indicating that confidence in ETH's profitability is weakening.
In the context of weakening institutional confidence and growing indifference from investors, Ethereum is unlikely to regain its superior performance over Bitcoin as in previous cycles — unless a sufficiently strong catalyst emerges to break through current structural barriers and rekindle sustainable growth momentum.
Could a massive outflow of capital trigger a recovery?
Recently, Ethereum recorded one of the largest withdrawals from Binance, with over 85,000 ETH moved off the exchange — a notable signal as the market seeks clues for the next trend.
History shows that large withdrawals of ETH from exchanges are often accompanied by price increases, as selling liquidity diminishes, creating conditions for buying pressure to push prices higher.
ETH's recovery of the $1,900 level shortly after this move has raised questions: are the whales quietly accumulating in preparation for a recovery? As supply on exchanges becomes scarcer, the risk of a liquidity crunch will likely increase — a factor that has historically catalyzed significant price increases.
Not all major coins guarantee a price increase; some are simply a safe haven during times of instability. The upcoming days will play a crucial role in determining whether this is a quiet accumulation process or merely a manifestation of caution before a new wave.
Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making decisions. We are not responsible for your investment decisions.
