Why has ETH been consistently outperforming BTC in the past month? Many people understand it as an ordinary catch-up. But I believe that behind ETH's recent strong performance, what really happened was a change in pricing logic. Over the past year, the market has labeled ETH with negative labels: The decline in mainnet revenue, L2 diversion value, Solana stealing users, ETF funds falling short of expectations, ETH/BTC continuing to weaken, and even the debate over whether ETH still has value capture has become a topic of debate. When everyone knows it's not good and the position has already dropped to a very low level, the price no longer needs a particularly big boost. As long as the fundamentals don't continue to deteriorate, funds will start to replenish. But that's not all the reason for ETH's strength: Firstly, institutional and treasury buying is changing the supply and demand structure of ETH The simplest option for institutions to enter the cryptocurrency market in the previous round was to buy BTC, as BTC has a clear narrative, fixed supply, and is also the easiest to explain to the board of directors. But now, some listed companies are starting to try to replicate the path of Strategy, simply switching assets from BTC to ETH. The reason is straightforward: BTC can only wait for its price to rise, while ETH can not only appreciate but also pledge and generate profits. As of the end of July 2025, the publicly disclosed holdings of corporate treasury have approached 970000 ETH, while by the end of 2024, they were less than 120000 ETH. This indicates that the purchase of ETH by enterprises is not a scattered trial position, but rather gradually forming an independent treasury track. BitMine, SharpLink, Bit Digital, and other companies have all expanded their ETH reserves through financing. The biggest difference between this type of fund and individual investors is: After buying, they don't just leave to earn a dozen points, but hope to continuously increase the amount of ETH per share through holding, pledging, and capital market financing. Once this model runs, market buying will no longer only come from traders, but also from corporate balance sheets. Secondly, ETH is transitioning from a "no return ETF asset" to a return asset that Wall Street can understand Early ETH spot ETFs had a clear flaw: investors held ETFs but were unable to receive on chain staking returns. This means that long-term holders will give up a portion of their potential returns every year, which weakens the attractiveness of ETH relative to BTC. However, as staking ETH products advance, ETH begins to have a more familiar expression in traditional finance: There is a possibility of both asset price increases and holding returns similar to cash flows. In 2026, institutional oriented staking ETH funds will be launched, and the market expects more similar products to emerge. Although staking is not risk-free, it gives ETH the dual narrative of "institutional assets+on chain returns" for the first time. BTC is more like gold, while ETH is increasingly like an on chain land that can generate rent. As expectations of loose liquidity rise, the latter naturally has greater valuation elasticity. Thirdly, stablecoins and RWAs are re strengthening Ethereum's financial attributes In the past, the market used to evaluate Ethereum by focusing on gas fees and mainnet revenue. However, Ethereum's true moat is not just trading speed, but that it has become a stablecoin DeFi、 The important infrastructure for asset tokenization and on chain clearing. Once stablecoin regulation becomes clearer and banks, payment companies, and large corporations issue their own stablecoins, the market will rethink: where do these assets ultimately settle? Which networks have the most mature liquidity, development tools, hosting systems, and institutional recognition? Ethereum may not necessarily monopolize all users, but it still occupies the core position of the settlement layer in on chain finance. The previous progress in stablecoin regulation was one of the important catalysts for ETH's relative strength to BTC. The market is beginning to realize that L2 activity does not necessarily mean Ethereum is being phased out, it may also mean that Ethereum is transitioning from a regular public chain to the underlying settlement network of the entire on chain financial system. Fourthly, the supply of ETH is tighter than it appears on the surface The total supply of ETH seems considerable, but there are not as many chips that can be sold at any time as imagined, and many have been destroyed. Part of it is pledged for a long time, part enters DeFi, and part is held by ETFs, funds, and corporate treasuries. These ETH have not completely disappeared, but liquidity has significantly decreased. In a bear market, supply contraction is meaningless because no one buys them. However, once ETFs, treasury companies, and trading funds appear simultaneously, the only new demand that needs to be competed for is actually the limited chips in the exchange. This is also the reason why ETH often experiences sudden acceleration: when the price does not rise, everyone feels that there is a lot of supply; After the price rose, the market realized that there were not many people willing to sell. Fifthly, BTC has completed a round of institutional pricing, while ETH is still in the stage of valuation repair BTC has been fully revalued by ETFs, corporate treasuries, and global funds in the previous cycle. It remains the most core asset in the cryptocurrency market, but the larger the market value, the more funds are needed to drive prices. ETH has long been underperforming BTC, and ETH/BTC has fallen to an extremely pessimistic position, indicating that a large amount of funds have withdrawn and market positions have become lighter. When risk appetite recovers, funds are often not satisfied with BTC's limited upward elasticity. They will look for assets with sufficient liquidity, institutional access, narrative validity, and severely undervalued. ETH perfectly meets these conditions. So recently, ETH has been strong, not only because ETH has improved, but also because BTC is already very expensive, and ETH was previously suppressed by the market too low. Sixth, this round of rise also includes position replenishment and short squeeze After ETH has been weaker than BTC for a long time, the market has formed a very crowded consensus: go long on BTC and avoid ETH; Long SOL, short ETH; Or directly short ETH/BTC. This type of trading is very comfortable when the trend continues, but when ETH no longer hits new lows and institutional buying continues to emerge, ETH/BTC begins to rebound, and the original bears will be forced to close out. Therefore, this round of rise includes both real spot demand and fund replenishment, arbitrage trading liquidation, and leveraged short stop loss. This will make ETH perform faster than fundamental improvement at certain stages, but it also means that short-term gains will not be in a straight line. So, where exactly is the bear market bottom for ETH? I believe that determining the bottom of ETH cannot be solely based on the price of the US dollar. Three bases must be observed simultaneously: The first one is the price floor of ETH/USD. It depends on whether BTC can complete the final round of bear market clearing, as well as whether US stocks and global liquidity will deteriorate again. The second is the relative value floor of ETH/BTC. If BTC falls again in the future, but ETH/BTC no longer falls below its previous low, it indicates that the market is no longer willing to further reduce the relative valuation of ETH, which is more important than the short-term rise in ETH USD price. The third one is the expected bottom of fundamentals. Even though the main network revenue remains sluggish, the L2 controversy still exists, and the market continues to question ETH, the price is no longer sensitive to these bad news. The true bottom is never without bearish sentiment, but with bearish sentiment still present and selling no longer possible. Therefore, ETH's recent strength may not necessarily prove that it has completely entered a bull market. But it at least indicates that the market is shifting from 'everyone wants to abandon ETH' to 'someone is starting to seriously consider whether ETH is undervalued'. This step is crucial as BTC determines the lower limit of the cryptocurrency market, while ETH/BTC often determines the risk appetite and wealth effect of the next round of the market. The true bear market bottom of ETH may not necessarily be the day when the price is at its lowest, but rather the day when everyone still looks down on it but it can never fall again.