Ethereum’s Performance Overview

Ethereum’s performance has weakened against Bitcoin since 2023, signaling declining interest and capital outflows.

Low Open Interest and Emotional Exits

Low open interest and emotional exits suggest Ethereum may be primed for a potential volatile rebound.

During the 2021–2022 cycle, Ethereum (ETH) notably outperformed Bitcoin (BTC), buoyed by speculative enthusiasm, major network upgrades, and elevated activity in the derivatives market. Traders piled into ETH perpetual futures, betting on its long-term dominance amid the DeFi boom and the transition to proof-of-stake.

However, since early 2023, the momentum of the ETH/BTC ratio has sharply reversed. Ethereum’s weakening performance against Bitcoin signals a broader market shift defined by declining interest and cautious capital outflows from ETH.

Long-term Depreciation Signals in ETH/BTC

Data suggest Ethereum’s weakening position relative to Bitcoin:
– Since early 2023, both the ETH/BTC price ratio and the perpetual futures open interest ratio have seen sharp declines.
– By March 2025, open interest dropped to 0.15 while the price ratio fell to just 0.02, indicating bearish conviction among leveraged traders.

This downturn is not fleeting; it represents a deeper shift in market sentiment. Speculators are rotating out of Ethereum, and diminishing open interest hints at a collapse in trader confidence.

Fear, Emotion, and the Case for a Rebound

While the chart indicates a sobering drop in ETH/BTC ratios and open interest, it also reflects fear. The sharp decline indicates emotionally-driven exits as investors seek safety in Bitcoin. Such apathy has often marked pivotal bottoms.

In late 2018 and mid-2020, similar capitulation phases were followed by explosive Ethereum rallies. What seems like abandonment could be an emotional reset preceding accumulation. With fewer speculative positions and low liquidity, Ethereum may be primed for volatility. If sentiment shifts even slightly, a rebound could be swift and violent, suggesting this downturn may be less of an end and more of a coiled spring.

A Setup for Shock Recovery

When markets become overly one-sided, volatility thrives. Ethereum’s current position, characterized by thin liquidity and low open interest, creates an ideal setup for a sharp reversal. The “max pain” concept often marks turning points where most are betting on further downside, only to be surprised by a sudden rally.

If ETH regains momentum, the ETH/BTC ratio could quickly rise back to 0.07. With positioning at extreme lows, even a slight shift in sentiment or a cooldown in BTC could trigger a high-volatility comeback.