Ethereum’s native token, Ether (ETH), has lost more than 35% of its value against Bitcoin (BTC) over the past year, and technical and on-chain indicators suggest the downtrend may not be over. The persistent underperformance has revived comparisons to the 2024–2025 bearish cycle, raising the possibility of another significant leg lower.
Technical setup mirrors 2025 bearish pattern
ETH/BTC remains trapped below a multi-year descending trend line that has rejected every breakout attempt since 2022. The most recent rejection occurred in August 2025, when the pair touched a confluence of resistance near the 0.382 Fibonacci retracement level and the 50-month exponential moving average (EMA). Since then, the pair has fallen back below its 20-month EMA support near 0.034 BTC, signaling that sellers remain firmly in control.
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If the current weakness persists, analysts point to the next major downside target around 0.0176 BTC, a level that aligns with the 2020 cycle bottom. Reaching that mark would represent an additional decline of roughly 40% from current prices.
Exchange reserves reveal diverging supply dynamics
On-chain data from CryptoQuant shows a growing divergence in exchange reserves between the two largest cryptocurrencies. As of May 2026, Ether reserves on Binance, the world’s largest crypto exchange by volume, had climbed to 3.62 million ETH, representing about 24.6% of all Ether held on exchanges. In contrast, Bitcoin reserves on Binance have been declining over the same period.
Rising exchange balances typically indicate that more tokens are available for sale, which can weigh on price if demand is insufficient to absorb the additional supply. Falling reserves, on the other hand, often suggest that coins are being moved to cold storage for longer-term holding. This divergence reinforces the broader market narrative: Ether is facing relatively higher available supply, while Bitcoin is showing signs of tighter exchange-side liquidity.
Fundamental headwinds for Ethereum
Ethereum’s weakness also reflects a shift in fundamental narratives. The “ultrasound money” thesis that gained traction after the network’s transition to proof-of-stake has lost momentum as Ether’s supply growth has resumed. Bitcoin, meanwhile, continues to benefit from institutional adoption, including corporate accumulation by firms like Strategy and increasing integration into traditional Wall Street portfolios.
The combination of technical resistance, on-chain supply pressure, and fading narrative strength suggests that Ethereum’s relative underperformance against Bitcoin may persist in the near term. Market participants are watching closely to see whether the 0.0176 BTC level holds as a floor or becomes the next target in a prolonged downtrend.
Conclusion
Ethereum’s 35% decline against Bitcoin over the past year is rooted in both technical and fundamental factors. The rejection from a long-term trend line, rising exchange reserves, and a shift in market narratives all point to continued downside risk. While a recovery is always possible, the current data suggests that the path of least resistance for ETH/BTC remains lower.
FAQs
Q1: Why is Ethereum underperforming Bitcoin?
Ethereum is facing technical resistance against a multi-year trend line, rising exchange reserves that indicate higher available supply, and a weakening narrative around its “ultrasound money” thesis. Bitcoin, in contrast, is benefiting from institutional adoption and declining exchange reserves.
Q2: What is the next key support level for ETH/BTC?
The next major downside target is around 0.0176 BTC, which would represent a roughly 40% decline from current levels. This level corresponds to the 2020 cycle bottom.
Q3: Are rising exchange reserves always bearish for price?
Rising exchange reserves can signal increased selling pressure, but they are not a definitive predictor of price declines. The impact depends on whether demand is strong enough to absorb the additional supply. In the current environment, the divergence between rising ETH reserves and falling BTC reserves is seen as a bearish signal for Ethereum relative to Bitcoin.
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