- Ethereum’s performance has weakened against Bitcoin since 2023, signaling declining interest and capital outflows
- 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 ETH/BTC has sharply reversed itself. In fact, Ethereum’s weakening performance against Bitcoin is a sign of a broader shift in market dynamics – One marked by declining interest and cautious capital outflows from ETH.
Long-term depreciation signals in ETH/BTC
Data seemed to paint a stark picture of Ethereum’s weakening position relative to Bitcoin.
Since early 2023, both the ETH/BTC price ratio and the perpetual futures open interest ratio have followed a sharp, sustained decline. By March 2025, Open Interest dropped to 0.15 while the price ratio plunged to just 0.02 – An unmistakable sign of bearish conviction from leveraged traders.
Source: Cryptoquant
This isn’t a fleeting correction. Instead, it signals a deeper shift in market sentiment. Speculators are rotating out of Ethereum, and the diminishing Open Interest hints at a collapse in trader confidence.
When derivatives markets show sustained disinterest, it often reflects not just lower prices, but a fundamental revaluation of an asset’s role in the broader market.
Fear, emotion, and the case for a rebound
While the chart reflected a sobering drop in ETH/BTC ratios and Open Interest, it also captures something important – Fear. The sharp decline hinted at not just disinterest, but emotionally-driven exits as investors seek safety in Bitcoin. Such apathy has often marked pivotal bottoms.
In late 2018 and mid-2020, similar phases of capitulation were followed by explosive Ethereum rallies.
What appears now as abandonment could be the emotional reset that precedes accumulation. With fewer speculative positions and low liquidity, Ethereum may be primed for volatility. If sentiment turns, even slightly, the rebound could be swift and violent. In that light, 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 position, with thin liquidity and low Open Interest, creates the perfect setup for a sharp reversal. The “max pain” concept often marks turning points, where most are betting on further downside, only to be caught off-guard 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 small shift in sentiment or a BTC cooldown could spark a high-volatility comeback.
