Bitcoin Surges 74% While Ethereum Drops 28% in Year

Bitcoin (BTC) and Ethereum (ETH) have shown a significant performance gap over the past year, with BTC rising 74% while ETH declined by 28%. This divergence has created a notable disparity in their market positions, with Bitcoin's dominance becoming overextended and Ethereum appearing undervalued and under-owned.

The data indicates that Bitcoin began to outperform Ethereum in mid-2024, and this trend has continued to widen. Observers suggest that Bitcoin's current dominance is at risk, while Ethereum is primed for a catch-up phase. The market is anticipating a "rotation season," where capital is expected to shift from Bitcoin into alternative cryptocurrencies, particularly Ethereum.

The 12-month comparison between BTC and ETH reveals a clear inflection point where Bitcoin's outperformance started, followed by a persistent downward trend for Ethereum. With Ethereum near multi-month lows, the potential for mean reversion and capital reallocation is increasing. Historically, such wide performance gaps between BTC and ETH tend to normalize as investor interest in alternative Layer 1 assets resurfaces, especially when macro conditions favor risk rotation.

Several factors could influence Ethereum's rebound. ETH dominance may rise if momentum shifts toward undervalued altcoins. Bitcoin's overbought status could lead to consolidation, making Ethereum more attractive. Additionally, market sentiment, ETF flows, and growth in the Layer 2 ecosystem could fuel a rebound in Ethereum demand. With the market heavily tilted toward Bitcoin, the conditions are ripe for Ethereum to narrow the performance gap in the coming months, potentially initiating a new altcoin rotation cycle.