Ethereum has now overtaken Bitcoin momentum through ETF inflows, bullish charts, and key regulatory wins and we’ll unpack why ETH is outperforming for the first time in 2025

Introduction

In the past month, Ethereum (ETH) has surged approximately 54%, while Bitcoin (BTC) delivered only around 10% gains—a dramatic shift rarely seen in market history

This stark contrast sets the stage for our deep dive into why ETH is outperforming for the first time. For the first time in recent memory, ETH is outperforming Bitcoin by wide margins.

Performance Snapshot: ETH vs BTC

ETH has gained ~54% over the past month, outpacing BTC’s ~10% gain

Analytics Insight

.ETH/BTC price ratio climbed sharply—Coingecko reports roughly 37% to 46% monthly rise, pushing the ratio close to 0.031–0.032 BTC per ETH

CryptoQuant data shows ETH spot volume exceeded BTC trading volume for the first time since mid‑2024, marking a historic rotation

Indeed, Why ETH Is Outperforming for the First Time captures this rare divergence in momentum.

The Structural Shift in Market Sentiment

Market sentiment has clearly pivoted. ETH has asserted itself through faster rising spot volume, surpassing BTC for the first time in over a year—ETH reached $25.7B vs BTC’s $24.4B in weekly spot volume

Meanwhile, the ETH/BTC ratio breaking through resistance levels signals a possible longer-term trend reversal in favourites between altcoins and Bitcoin.

Historical Context: ETH’s Underperformance Until Now

Since Ethereum’s inception in mid‑2015, ETH has underperformed Bitcoin on approximately 85% of all trading days, meaning that only ~15% of days saw ETH outperform BTC

Over nearly a decade, Bitcoin dominated much of the risk‑on rally momentum. ETH’s tendency to lag underscores fundamental preferences for BTC as a store‑of‑value asset.

ETH/BTC ratio dynamics reflect this dominance. At its lowest point in early 2025, the ratio hit around 0.018, representing a five‑year nadir last seen in late 2019

This extreme low underscores just how deeply Ethereum had lagged behind Bitcoin in relative performance.

Timeline of Key Network Upgrades

The Merge (September 15, 2022)

Ethereum transitioned from proof‑of‑work to proof‑of‑stake via the Paris upgrade, cutting energy usage by over 99% and laying the foundation for staking and sustainability improvements

Despite expectations, ETH failed to outpace BTC in subsequent months, maintaining structural underperformance.

Dencun Upgrade (March 13, 2024)

Also known as Deneb‑Cancun, Dencun enabled proto‑danksharding (EIP‑4844) and “blob” support that dramatically lowered Layer‑2 transaction costs

Despite these scalability improvements, ETH’s relative strength to BTC continued toward historic lows—by early 2025, the ETH/BTC ratio hovered around 0.027 as it reached levels not seen since early 2021

Pectra Upgrade (May 7, 2025)

The Pectra fork combined the Prague execution-layer and Electra consensus-layer upgrades, becoming Ethereum’s most ambitious overhaul since the Merge

It included 11 EIPs—such as EIP‑7691 doubling blob throughput, staking cap raised to 2,048 ETH per validator, gas paid in arbitrary tokens, improved account abstraction, and smart contract optimizations

Even with these enhancements, by May 2025 ETH had declined ~45% year‑to‑date and continued to lag BTC and rivals like Solana in price performance

Framing the Shift: Why ETH Is Outperforming for the First Time

Understanding this long history of why ETH underperformed nearly everywhere provides vital background for appreciating the reversal: Why ETH Is Outperforming for the First Time. 

After nearly a decade of lagging 85% of the time, the combination of protocol upgrades, investor rotation, and regulatory tailwinds set the stage for ETH’s rare ascendancy.

From 2015 through early 2025, ETH outperformance was the exception—not the rule (~15% of days)

The ratio trough of 0.018 in early April 2025 marked a stark baseline before the sharp rebound in ETH’s relative valuation

Technical improvements via The Merge, Dencun, and Pectra addressed key constraints—but adoption and price response lagged until recent catalysts aligned.

Thus, this historical underperformance context is essential to fully appreciate: Why ETH Is Outperforming for the First Time. 

The current breakout isn’t merely a cyclical bounce—it represents a structural shift, unmooring Ethereum from a long-standing underperformance pattern.

What’s Changed: Why ETH Is Outperforming for the First Time

Ethereum’s sudden edge over Bitcoin reflects a convergence of institutional flows, speculative rotation, regulatory clarity, on‑chain signals, and technical breakouts—dynamics that were absent or muted before. Here’s a breakdown of the key changes fueling the shift.

Institutional & ETF Flow Surge

BlackRock’s spot ETH purchases skyrocketed—over $1.2 billion of ETH in a single week, compared to just $267 million in BTC—a more than 4× allocation bias toward Ethereum

Spot ETH ETFs (BlackRock ETHA, Fidelity FETH, Grayscale ETHE) have recorded massive inflows: a record $855 million weekly haul in Dec 2024, and weeks with daily inflows topping $723 million, led by BlackRock’s $500 M share

As of July 2025, cumulative inflows into spot ETH ETFs have surpassed $4 billion, with BlackRock’s ETHA AUM alone nearing $10 billion

Why ETH Is Outperforming for the First Time in ETF flows: institutional demand is decisively prioritizing Ethereum over Bitcoin.

Speculative & Futures Volume Rotation

For the first time since 2022, ETH perpetual futures volume has overtaken BTC’s, marking the largest speculative shift ever in ETH’s favor

Glassnode data shows ETH futures volume at ~$90.8 billion, slightly ahead of BTC’s ~$82.9 billion, underscoring persistent rotation into altcoin risk-taking

This futures dominance signals traders are reallocating risk capital toward Ethereum—another frontier in Why ETH Is Outperforming for the First Time.

Regulatory Catalysts & Stablecoin Legislation

Regulatory clarity advanced via U.S. policymaking including the GENIUS Act, designed to create stablecoin frameworks that predominantly support Ethereum as the tech base layer

The Senate’s broader “Project Crypto” agenda and ETF approvals give institutional players comfort investing in ETH rather than raw BTC, boosting confidence in Ethereum’s regulatory future

These structural improvements help explain Why ETH Is Outperforming for the First Time in institutional preference.

On‑Chain Metrics & Market Sentiment

ETH has entered an extreme undervaluation zone in the ETH/BTC MVRV metric, only seen previously in 2019 and 2017–18 cycles—zones that historically preceded powerful ETH rallies

Whale accumulation is rising, exchange supplies are shrinking, and realized profits are increasing—all indicators of growing conviction and capital inflow

These strong on‑chain signals form the backbone of Why ETH Is Outperforming for the First Time, suggesting institutional and retail accumulation is broad-based.

Technical & Chart Signals

MACD and RSI indicators have turned bullish, and ETH appears to be breaking out of a long‑standing symmetrical triangle formation that compressed price through 2025

The breakout toward $4K and target range of $4,500 are driven by technical pattern confirmation as futures and ETF flows align.

This confluence—technicals finally aligning with fundamental momentum—is a key reason Why ETH is outperforming for the first time.

Quantitative Comparison: ETH vs BTC in 2025

Ethereum and Bitcoin have shown markedly different trajectories in 2025, reinforcing Why ETH Is Outperforming for the First Time in relative momentum and investor attention.

Price & Performance Comparison

As of early August 2025, Bitcoin trades around $118,000, while Ethereum sits at about $3,700.

Over the past month, ETH has gained approximately 54%, compared to BTC’s ~10% increase

This differential in performance is a clear numeric reflection of Why ETH Is Outperforming for the First Time in recent months.

Market Capitalization & Dominance Metrics

Ethereum’s market cap reached $658 billion in 2025, reflecting a strong rebound from last year’s $490 billion. Combined, BTC and ETH account for 69% of the total crypto market capitalization in 2025. The Ethereum-to-Bitcoin market cap ratio stands at 0.49:1 in 2025.

ETH dominance has climbed to 23.6%, up from 21.4% in 2024. BTC dominance has declined to ~48.3% under $2.8 trillion total crypto market cap, although later cap estimates broadly exceed $3 trillion

Ethereum’s rising share reinforces investor rotation and underscores Why ETH Is Outperforming for the First Time relative to Bitcoin.

Five‑Year Return Comparison

Between mid‑2020 and mid‑2025, Bitcoin returned approximately 1,184%, while Ethereum gained only around 1–1.6% (range varies by data source)

Over the same period, ETH’s performance was minuscule compared to BTC’s dominant growth, showing just how significantly ETH has underperformed historically.

These long‑term returns set the baseline from which the recent ETH rally stands in sharp contrast.

Expert Perspectives & Forward Outlook

Mike Novogratz (Galaxy Digital):

“Ethereum probably has a lot of chance to outperform Bitcoin in the next 3 to 6 months,” said Novogratz on CNBC, citing institutional demand and restricted ETH supply from treasury companies entering the market

He noted that hitting the $4,000 level could trigger a breakup into price discovery and further momentum

Despite bullish ETH commentary, he still projects Bitcoin rising toward $150,000, contingent on macro stability and Fed policy, and doesn’t rule out BTC outperforming later

This aligns with Why ETH Is Outperforming for the First Time—Novogratz sees a tactical lead for Ethereum in the near term while maintaining broader upside for Bitcoin.

Compass Point (via Investing.com):

Their analysts emphasize a 2025 bounce-back opportunity in ETH, highlighting the ETH/BTC ratio (≈ 0.037) as significantly depressed—off nearly 70% since the Merge in 2022

They recommend a long position on ETH/BTC ratio as regulatory clarity and ecosystem growth (DeFi, staking, Layer-2) underpin Ethereum’s potential

This technical valuation view supports Why ETH Is Outperforming for the First Time from a strategic positioning perspective.

Caution from Options Markets & Skeptical Analysts:

Option skew data reveals traders paying up for ETH calls; skew and volatility conditions show some hedging bias, signaling concerns about short-term downside risk despite bullish sentiment

While MVRV and on-chain signals point to undervaluation, analysts remind that momentum may fade once major regulatory developments are priced in or after speculative flows cool

The skew and sentiment caution serve as counterpoints to the bullish framing of Why ETH Is Outperforming for the First Time, suggesting there’s risk in overconfidence too quickly.

Conclusion

With surging ETF inflows, regulatory clarity favoring Ethereum’s ecosystem, bullish technical signals, and growing institutional demand, the answer to Why ETH Is Outperforming for the First Time lies in its maturing fundamentals finally aligning with market momentum.

This shift isn’t just a temporary pump—it signals a broader rotation toward Ethereum’s smart contract-driven utility and its expanding role as the backbone of DeFi, NFTs, and stablecoins. 

While Bitcoin remains a dominant store of value, Ethereum’s network effect and institutional adoption could redefine crypto leadership in the years ahead.

FAQs

What does it mean that ETH is outperforming Bitcoin for the first time?

It means Ethereum’s price growth, trading volume, and institutional inflows are outpacing Bitcoin’s—something historically rare, as BTC has led most crypto market cycles.

Why is ETH outperforming Bitcoin in 2025?

Key drivers include spot ETH ETF approvals, increased institutional demand, bullish on-chain metrics, and regulatory optimism around stablecoins and Ethereum-based assets.

Does ETH outperforming Bitcoin mean it will “flip” BTC?

Not necessarily. While ETH’s recent surge narrows the gap, Bitcoin still leads in market cap. However, ETH’s utility and adoption could drive its share higher in future cycles.

How do ETFs impact why ETH is outperforming for the first time?

Spot ETH ETFs allow institutions to invest in Ethereum directly, boosting demand and liquidity. In 2025, ETH ETFs saw higher inflows than BTC funds, fueling its price surge.

Should investors rotate from Bitcoin to Ethereum now?

It depends on your strategy. Bitcoin remains the go-to store of value, but ETH’s current outperformance suggests diversified exposure could benefit from Ethereum’s growing momentum.