Can Ethereum outshine Bitcoin in terms of returns?

Key Takeaways

What’s the current price structure of Ethereum and Bitcoin?

Bitcoin and Ethereum have all been bearish in the past week following a broader market correction.

What’s the potential performance of both assets in Q4?

The two cryptos have historically performed well in the last quarter of the year.

Bitcoin [BTC] and Ethereum [ETH] have long held the top positions in the cryptocurrency sector. The two have the largest capitalization, in addition to their institutional backing through ETFs and other products.

The recent performance of ETH, especially in the third quarter, has raised comparisons with BTC, with some analysts expecting it to outperform in terms of gains.

A detailed analysis of a couple of metrics around them could help uncover this rhetoric.

ETH outperforms BTC in quarterly returns

Since the beginning of the second quarter of the year, Ethereum has outperformed Bitcoin with 97% returns against 32%. In the first quarter, BTC dropped by 11%, while ETH saw a 45% decline.

The results came after a bullish rally in the last quarter of 2024 for both assets, although BTC did better.

The third quarter made the bigger difference, with ETH gaining 60% against 2%. The two were printing a similar pattern, one seen in 2017.

Ethereum vs. Bitcoin price action ahead of Q4

On the charts, the structure was almost similar, as they had lost their ascending support trendlines. Both have also broken the necklines of the bearish reversal patterns.

As the crypto cycles head into Q4, which is often bullish, a price rally could be expected. However, the magnitude of performance for both coins is expected to differ.

BTC, which is seen as the more adopted asset, had higher odds, but the changing dynamics in fintech, like DeFi and tokenization, gave ETH an edge against BTC due to increased capital streams.

In the meantime, both tokens were down, with traders starting to accumulate following the discount. BTC dipped below $110,000 as ETH tested levels below $4,000, but quickly rejected this dip.

Accumulation styles rhyme but ETF flows differ

In terms of accumulation, players on both sides were buying, though that of ETH was choppy. While the decline in exchange reserves for BTC was steady and consistent, the last robust period for ETH was in 2021.

At the time of writing, Ethereum exchange reserves had dropped to $64.233B in ETH. For BTC, the reserves declined to $2.38B BTC as per CryptoQuant data.

Meanwhile, the total netflow of Bitcoin Spot ETFs was at 615.77 BTC, but there were outflows of 3.84K BTC on the day, as per CoinGlass data. The total net assets for these ETFs stood at $147.87 billion.

On the other hand, the total assets by Ethereum Spot ETFs was 3.69 million ETH. The weekend activity of these products was flat, suggesting BTC was the stronger asset on this front.

Altogether, both assets could outperform in Q4, with Ethereum poised to continue its lead, as in the last two quarters. However, BTC’s strong institutional and government backing could make this a difficult undertaking.