Why Ethereum (ETH) Is Rising Compared to Bitcoin

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Despite ongoing bearish pressure across the broader cryptocurrency market, Ethereum (ETH) has demonstrated remarkable resilience by holding firm above the critical $2,500 support level. This price strength stands out at a time when many digital assets are experiencing volatility, signaling growing confidence in Ethereum’s long-term value proposition.

Recent data from Coinglass reveals that on January 16, short liquidations for ETH reached $15.03 million, significantly higher than long liquidations, which totaled $5.3 million. Despite this surge in bearish bets being wiped out, Ethereum maintained its position above $2,500 and even pushed higher—briefly touching a peak of $2,614 on the ETH/USD pair. This successful breakout above the $2,500 resistance level underscores strong underlying demand and bullish momentum.

A report by 10xResearch highlights a key supporting trend: Ethereum’s share of total futures market open interest has been steadily increasing since the start of the year. This growth reflects rising trader participation and sustained institutional and retail interest in ETH as a strategic asset within the crypto ecosystem.

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Ethereum’s Market Sentiment and On-Chain Strength

One of the most compelling indicators of Ethereum’s current strength lies in its on-chain activity and shifting market dynamics. According to analytics platform Santiment, Ethereum’s dominance among altcoins recently hit an 18% three-month high—an increase of 22.4% over just one week. This surge suggests a significant rotation of capital from Bitcoin into high-utility smart contract platforms like Ethereum.

Additionally, daily new Ethereum address creation averages around 89,400, with a single-day spike reaching 96,300 new wallets on January 16. This consistent user growth reflects expanding adoption and network engagement—key fundamentals for long-term price appreciation.

Another critical metric is the decline in Ethereum’s supply held on centralized exchanges. Current figures show exchange reserves near an 8.05% all-time low. This trend indicates that more investors are moving their ETH off exchanges and into private wallets or staking contracts, reducing circulating supply and potential sell-side pressure.

This shift toward self-custody and staking not only enhances network security but also signals strong holder conviction. When fewer tokens are available for immediate sale, the likelihood of sudden sell-offs diminishes—creating a more favorable environment for price stability and upward movement.

Why Traders Expect ETH to Outperform BTC

Market analysts are increasingly bullish on Ethereum’s ability to outperform Bitcoin in the near term. A key signal comes from the Bitcoin Dominance Index, which has fallen below 50% for four consecutive days, as reported by 10xResearch. Historically, such a drop often precedes periods where altcoins—especially Ethereum—gain momentum relative to BTC.

Ethereum’s robust fundamentals and upcoming protocol upgrades further strengthen this outlook. The recent deployment of the Cancun-Deneb (Dencun) upgrade on the Goerli testnet marks a major milestone in Ethereum’s scalability roadmap. At the heart of this upgrade is EIP-4844, which introduces proto-danksharding—a critical step toward improving Layer 2 (L2) transaction efficiency.

How EIP-4844 Will Transform Ethereum

EIP-4844 is set to dramatically reduce transaction fees on Ethereum’s L2 networks, including Optimism, Base, and Polygon zkEVM. By enabling “blobs” that carry large amounts of data off the main chain while still being secured by Ethereum, the upgrade will lower costs for users and encourage greater adoption of decentralized applications (dApps).

This fee reduction could catalyze a new wave of user activity across DeFi, NFTs, and Web3 gaming platforms built on L2s—driving increased demand for ETH used in gas payments and interactions.

Beyond scalability, Dencun also introduces important network improvements:

The next phase of testing includes implementation on the Sepolia testnet on January 30, followed by Holesky on February 7. While the mainnet launch date remains unannounced, anticipation is building among developers and investors alike.

👉 Explore how Ethereum’s upgrades could impact your crypto strategy in 2025

Frequently Asked Questions (FAQ)

Q: Why is Ethereum rising while Bitcoin remains flat or declining?
A: Ethereum is benefiting from strong on-chain activity, declining exchange reserves, and anticipation of major scalability upgrades like Dencun. These factors are attracting investor interest separate from Bitcoin’s price action.

Q: What is EIP-4844 and why does it matter?
A: EIP-4844 introduces “proto-danksharding,” which reduces data load on Ethereum’s main chain by using temporary data storage units called blobs. This significantly lowers transaction fees on Layer 2 networks, making Ethereum more scalable and user-friendly.

Q: Does a drop in Bitcoin dominance mean ETH will outperform?
A: A falling Bitcoin dominance often signals increased capital flow into altcoins. Given Ethereum’s leading role in DeFi and smart contracts, it typically benefits first during such rotations.

Q: How does staking affect Ethereum’s price?
A: Over 27% of all ETH is currently staked. This locks up supply, reducing liquidity and increasing scarcity. Combined with growing demand, this can create upward price pressure over time.

Q: When will the Dencun upgrade go live on Ethereum mainnet?
A: The exact mainnet launch date hasn’t been confirmed yet. However, successful testnet rollouts on Goerli, Sepolia, and Holesky are paving the way for a potential Q1 2025 deployment.

Q: Is holding ETH safer than trading altcoins?
A: While no investment is risk-free, ETH ranks as the second-largest cryptocurrency by market cap and powers the majority of decentralized applications. Its established ecosystem and continuous innovation make it one of the more resilient altcoins.

Looking Ahead: Ethereum’s Path Beyond 2025

As Ethereum prepares for full-scale scalability through rollups and sharding, its role as the foundation of Web3 continues to solidify. Unlike Bitcoin, which primarily functions as digital gold, Ethereum serves as an active platform for financial innovation, governance, identity, and digital ownership.

With rising developer activity, strong community support, and institutional interest growing around ETH staking and ETF speculation, the network appears well-positioned for long-term growth—even amid short-term market fluctuations.

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Core Keywords:

By combining technical innovation with measurable on-chain growth, Ethereum is not just surviving market downturns—it's using them as opportunities to build toward a more scalable and sustainable future.