Ether has massively outperformed bitcoin in terms of returns. Why does this pose a risk to the S&P 500?

Ether became the main beneficiary of investors' interest this summer: capital inflows into ETFs ensured its price rise by 44% against bitcoin's 4%. However, experts remind us that such a sharp rally has already coincided more than once with subsequent drops in the S&P 500.

This summer, ether has significantly overtaken bitcoin in terms of profitability: since the beginning of July, it has added 44% against 4% for the second cryptocurrency. However, analysts warn - if the advantage of ether begins to weaken, the stock market may face increased volatility, writes MarketWatch.

According to Tom Essaye, founder of Sevens Report Research, historically, reversals in the ETH/BTC pair have often coincided with 10-20% corrections in the S&P 500 index. "Over the past ten years, every time we've seen such a strong rise in the ETH/BTC pair, stocks have rushed up in sync," he said in a research note.

The key question is what happens when ether's advantage disappears. In past cycles, as soon as the ETH/BTC rally lost momentum, a volatility spike soon followed. This usually coincided with important reversals: The "low-volatility" rally of 2017, followed by the sell-off of 2018; the late-2019 rally before the pandemic crash of 2020; and the 2021 rally that preceded the bear market of 2022.

Since April 2025, ETH/BTC is up 130% from a five-year low, echoing the movement of the tech stock sector after the spring rebound. The only exception was 2023-2024, when bitcoin consistently outperformed ether - even amid a strong stock market. That's why the current situation looks particularly noteworthy: the new ETH/BTC growth makes investors keep a close eye on whether the historical pattern will return.

On August 24, the ETH/BTC ratio reached 0.043, the highest since September 2024, FactSet reported. Since the beginning of the year, ether has added 38.5% (including 75.9% in the last three months), while bitcoin has gained 20.3% and 6.3%, respectively.

"The risk that the 'long ETH/short BTC' strategy will soon run out of steam is clearly underestimated," Essaie warned, noting signs of slowing momentum. According to him, the uptrend that has been ongoing since August could soon be tested from a technical perspective.

The reason for ether's leadership was the record inflows into ether ETFs and expectations of a renewal of the historic high. According to AInvest, ether funds attracted $1.83 billion in the last five days alone, while bitcoin ETFs attracted only $171 million.

Bitget analysts add: in the second quarter of 2025, $13.3 billion flowed into ether ETFs, while bitcoin ETFs saw net outflows of $1.18 billion.

At the same time, institutional investors continue to actively increase their positions in bitcoin. Thus, in early August, Michael Saylor's company Strategy bought 21,000 bitcoins for $2.46 billion. This is the third largest deal in its history. As a result, the company's total bitcoin reserves exceeded $71 billion, with the average purchase price being one of the highest in the history of accumulations, CCN writes .

This article was AI-translated and verified by a human editor