Ether (ETH) has roared back into the spotlight, capturing the attention of a crypto community that had nearly written it off for this cycle. A surge of renewed confidence has propelled the digital asset to multi-year highs, sparking excitement about its potential. However, while the bullish momentum is undeniable, market intelligence analysts are flagging warning signs of increasing selling pressure, suggesting that the rally could soon face significant headwinds.
Ether’s Dominance: Outshining Bitcoin on Multiple Fronts
In recent weeks, Ethereum has decisively entered a bullish cycle against Bitcoin (BTC), demonstrating superior strength and attracting a larger share of investor capital. On August 14, ETH’s price climbed to $4,743, its highest point since November 2021 and just shy of its all-time high of $4,891.
Several key indicators highlight this outperformance:
Bullish Technical Signal: The ETH/BTC price ratio, a key metric for measuring Ether’s relative strength, has climbed above its 365-day moving average. Historically, this crossover has signaled the beginning of a strong bullish cycle for ETH against Bitcoin, and this time appears to be confirming a new leg up.
Shifting ETF Allocations: Investors are voting with their wallets. Spot Ethereum ETFs are recording significantly more inflows compared to their Bitcoin counterparts. The ETH/BTC ETF Holdings Ratio has tripled in just three months, climbing from 0.05 to 0.15, signaling a clear shift in institutional and retail capital.
Trader Preference in Futures: The derivatives market tells a similar story. The open interest of ETH relative to BTC on major crypto exchanges has risen sharply from 0.57 to 0.78. This indicates that traders in the perpetual futures market are placing more capital and conviction behind Ether’s future price movements.
Unprecedented Trading Volume: For four consecutive weeks, Ether’s spot trading volume has surpassed Bitcoin’s, with the most recent weekly gap reaching an impressive $10 billion. The ratio of Ether’s volume relative to Bitcoin recently spiked to 1.66, a level not seen since June 2017. This surge is reminiscent of the 2019-2021 period when ETH went on to outperform BTC by a factor of four.
Clouds on the Horizon? Analysts Warn of Growing Selling Pressure
Despite this remarkable performance, the data suggests that a correction may be approaching. The same momentum that drives prices up also creates a powerful incentive for early investors to secure their gains.
Analysts point to two critical signs of mounting sell-side pressure:
Approaching Overvalued Levels: As Ether’s relative price against Bitcoin continues to climb, it is nearing levels that are historically considered overvalued. This could prompt traders to rotate their profits from ETH back into BTC or stable coins.
Spike in Exchange Inflows: Most notably, daily ETH inflows to centralized exchanges have spiked, exceeding those of Bitcoin. In the crypto market, a sustained increase in exchange inflows is often a bearish indicator. It suggests that holders are moving their assets from private wallets to exchanges with the intent to sell, creating a larger supply pool that could absorb buying demand and push prices down.
While Ether’s current rally is built on strong fundamentals and clear investor preference, these headwinds cannot be ignored. The coming weeks will be crucial in determining whether the bullish momentum can be sustained or if the building selling pressure will lead to a significant price correction.
