Bitcoin remains stagnant below $120k, despite Jerome Powell's optimistic rhetoric, but is still trapped in a volatile range. However, Ethereum's ETH paints a very different picture. ETH rose 7% this week, and it is now trading just 2% away from its all-time high. More notably, the ETH/BTC ratio has broken through the resistance level of 0.04, a level not touched since the election season. This breakthrough has led many to question whether this is merely a fleeting ratio trade.
At first glance, Ethereum seems to be a beneficiary of Bitcoin capital rotation. However, from within, the Ethereum network exhibits deeper structural improvements that could drive sustainable growth. Recently, daily trading volume surged over 2 million, while active addresses approached 700,000. Historically, such activity has led to soaring gas fees, suppressing users and slowing momentum. However, this cycle tells a different story. Even with record throughput, fees remain low.
Upgrades like EIP-1559 and the rise of Layer-2 settlements explain this shift. Ethereum is no longer congested; instead, it is horizontally scaling to distribute demand across multiple settlement layers. The result is that the network is finally able to meet the surge in demand without imposing skyrocketing fees on users. This change is significant, as previous bull markets often encountered bottlenecks when gas fees surged. In 2021, Ethereum approached a high of $4,800 just as gas and transfer fees were spiking.
Meanwhile, the total value locked in Ethereum has approached $100 billion, the highest level since 2021. The resurgence of decentralized finance has flowed directly into Ethereum, strengthening its role as a pillar of decentralized finance. A stronger Ether price, combined with suppressed costs, has created a flywheel effect. More usage has fostered more confidence, which in turn drives more capital into the ecosystem. Ethereum no longer appears to be speculative trading, but rather resembles a mature network. In contrast to Bitcoin's volatile actions, this highlights potential structural divergences in liquidity.
Ethereum's trading is nearing new highs, while Bitcoin lingers in consolidation. Trading activity is soaring, yet gas fees remain low. Protocol upgrades and Layer-2 scaling have reshaped the network's capacity. With funds flowing back into decentralized finance, Ethereum's upward momentum appears to be built on a stronger foundation than in previous cycles.
