After more than a year of decline, the ETH/BTC ratio has rebounded strongly from the multi-year support zone ranging from 0.015 to 0.02 BTC, rising nearly 26% to 0.029 BTC at present.
This area has previously been an important accumulation zone in past cycles, including early 2019 and 2020. This bounce back indicates that the relative strength of Ethereum (ETH) may be beginning to change, after many months lagging behind Bitcoin.
With ETH outperforming Bitcoin in price, attracting higher inflows from ETFs, and benefiting from the declining dominance of Bitcoin, this reversal trend could be an early sign of structural changes favoring ETH.
Why did ETH outperform Bitcoin in the price race of July?
According to data from CoinMarketCap, ETH has risen 43% in the past month, reaching $3,614, far exceeding Bitcoin's 15% increase to $120,335. Notably, although Bitcoin has reached a new high above $122,000, its upward momentum has started to slow. In contrast, Ethereum's stronger increase reflects a return of optimism from investors.
The stark difference in this performance indicates that confidence in ETH's growth potential is increasing, especially in the context of rising interest in altcoins.
Thus, ETH's outstanding performance may signal that capital is shifting, as traders begin to seek higher profits beyond Bitcoin.
Are ETFs the driving force behind ETH's strong rally?
Ethereum ETFs recorded impressive growth in July, with net inflows reaching 79,674 ETH, equivalent to over $256 million. Specifically, iShares' Ethereum ETF has accumulated 55,984 ETH, worth $180.27 million, according to data from Lookonchain.
Although Bitcoin ETFs also recorded significant net inflows of 3,412 BTC (~$404 million), the relative growth rate of Ethereum ETFs is impressively stronger.
These inflows indicate growing confidence from institutions in the long-term value and application potential of Ethereum. Therefore, this could be a key factor driving ETH's strong rally in recent weeks.
Is the decline in Bitcoin's dominance signaling the arrival of altcoin season?
The dominance ratio of Bitcoin (BTC.D) has sharply decreased from 66.04% to 62.47%, equivalent to a drop of 5.43%, breaking the upward trend line that has supported BTC.D since late 2023.
The RSI index on the daily frame has now plummeted to 18.02, indicating extreme oversold conditions. Historically, similar breakouts have often coincided with strong price rallies of altcoins, especially large-cap coins like ETH.
The declining dominance of BTC, combined with the appeal of Ethereum ETFs and the strong price rally of ETH, is showing a shift of capital from Bitcoin to altcoins.
Therefore, the market may be entering a new bullish cycle led by altcoins, with ETH taking the lead.
In summary, the outstanding performance of ETH in July, along with the increasing interest from ETF funds and the declining Bitcoin dominance, has brought new hope for the bulls.
The recovery momentum of the ETH/BTC ratio from an important support zone is a positive signal. However, ETH needs to break through the resistance level of 0.038 BTC to confirm a sustainable trend change.
Until then, the current recovery still holds potential, but clearer confirmation signals are needed to strengthen confidence.
