- Ethereum failed to mirror Bitcoin’s move, leaving a notable divergence on the chart.
- The ETH/BTC pair could dictate the next directional impulse.
Volatility in the crypto market is back in full force.
On the 18th and 19th of May, Bitcoin [BTC] printed back-to-back breakout candles, closing at $107,111. Consequently, marking a clean sweep above levels, it hasn’t flexed since mid-January.
Ethereum [ETH], however, staged a clear divergence.
After a solid rejection at the $2,737 supply zone on the 13th of May, ETH failed to reclaim key structure and has since been drifting lower, losing nearly 13% from that local high.
But this divergence hasn’t been a fluke.
Early warning signals flash!
Typically, smart capital accumulates near local tops, triggering liquidity sweeps by targeting stop-loss clusters. It is a well-known tactic called “buying into the fear” designed to fuel bullish continuation.
However, current on-chain signals are indicating a potential shift toward distribution, with large holders offloading ETH positions.
Lookonchain captured this in real-time: Early dip buyers from May are pocketing profits. One whale, for example, loaded up at around $1,770 per ETH and just cashed out near $2,440, netting a hefty $3.18 million in realized gains.
The resulting deleveraging has been aggressive. Long liquidations accounted for nearly 78% of total wipeouts.
Despite Funding Rates (FR) remaining biased to the long side, an escalation in sell-side pressure could trigger further liquidity sweeps in the near term, indicating potential downside risk ahead.
Ethereum backtracks on its relative strength
Ethereum’s monthly gains have outperformed major assets, largely due to its undervaluation against Bitcoin.
This price gap attracted smart money, fueling a strong rebound in the ETH/BTC ratio and reinforcing ETH as a favored rotational play in the market.
However, weekly charts show a different story—ETH/BTC has dropped nearly 11%, indicating weakening relative strength as Bitcoin surges toward a new all-time high.
Source: TradingView (ETH/BTC)
The key takeaway: Smart money is actively strategizing around BTC’s price action.
As BTC consolidates near the $102K resistance zone, strategic dip-buying in ETH could trigger short-liquidation cascades and concentrated liquidity sweeps.
However, if BTC maintains bullish momentum toward new all-time highs, ETH’s relative performance may weaken as smart money reallocates capital.
The unfolding market rotation will be crucial in the coming days. If whales continue to take profits and shift funds into BTC, Ethereum could enter a broader capitulation phase, increasing downside risk.
