Why does Ethereum continue to underperform Bitcoin? ETF continuous net outflows and market structure analysis

As of March 31, 2026, according to Gate market data, ETH is quoted at $2,052.75 and BTC is quoted at $66,861.10. The ETH/BTC ratio has fallen to 0.0302. This level is a relatively low point compared with much of the past several years, indicating that Ethereum’s underperformance versus Bitcoin is still continuing. At the same time, the ETH ETF has recorded net outflows for multiple consecutive days, and the associated address of Ethereum co-founder Vitalik Buterin has also shown signs of reducing holdings. Taken together, these developments have prompted deep market reflection: is ETH’s weakness structural, or is it merely a temporary value trough?

What the current market performance reveals about structural changes

The continued decline in the ETH/BTC ratio is not short-term fluctuation, but a long-term trend running from the second half of 2025 to the beginning of 2026. From a technical chart perspective, after the ratio touched a high above 0.04100 in mid-2025, it entered a downtrend channel; from the second half of 2025 through the early part of 2026 it kept sliding lower, and then found a short-term bottom in the 0.03000 to 0.03005 range. As of March 31, the ratio further dipped to 0.0302, suggesting that the earlier support at the bottom is being retested.

One notable paradox is this: although large amounts of ETH have flowed out of centralized exchanges—which is typically interpreted by the market as an accumulation signal—ETH’s relative performance remains weaker than BTC’s. Exchange reserves fell from about 22 million ETH in 2023 to roughly 15 million ETH currently. Typically, token outflows from exchanges imply that investors are more inclined to hold than to sell, which should support the price. But the reality is the opposite: while supply is tightening, the price is weakening. The coexistence of this contradiction itself implies that deeper structural factors are suppressing ETH’s relative performance.

The driving logic behind continued ETF fund outflows

The direction of institutional capital flows is the key entry point for understanding this structural change. In the week of March 23 to 27, U.S. Ethereum spot ETFs recorded net outflows of $207 million; among them, withdrawals from BlackRock’s ETHA fund alone totaled as much as $285 million. This trend carried into the end of March. On March 30, the 9 Ethereum ETFs in total recorded net outflows of 49,902 ETH, with a value of approximately $103.3 million. In the same period, Ethereum ETFs have recorded net outflows for seven consecutive trading days, with a cumulative outflow size of about $392 million[.

In sharp contrast is the flow of funds into Bitcoin ETFs. While Ethereum ETFs continued to bleed out, Bitcoin ETFs recorded a net inflow of $167.23 million on March 23 alone, helping BTC regain and hold above the $71,000 level. This divergence in capital flows reveals that institutional investors’ risk appetite is narrowing: in an environment where uncertainty is increasing, capital is more inclined to move into Bitcoin, which the market views as “digital gold,” rather than Ethereum, whose valuation is more dependent on network adoption.

From a performance standpoint, this capital-flow choice is reasonable. Over the past year, the maximum drawdown of BlackRock’s ETHA fund reached -61.66%, which is clearly worse than the drawdown of roughly -49.33% for Bitcoin ETFs. Higher volatility combined with a larger drawdown means that after risk adjustment, Ethereum’s returns in institutional asset allocation are at a disadvantage.

Founder selling down: where market sentiment and individual behavior intersect

Another focus of market attention is Vitalik Buterin’s selling down behavior. In January 2026, Vitalik publicly announced that he would reserve 16,384 ETH from his personal holdings to fund the development of privacy-preserving technologies, open-source hardware, and secure verifiable software systems. Since it started executing in early February, this address has sold a cumulative total of about 17,000 ETH. Its total holdings have fallen from approximately 240,000 ETH at the beginning of the year to about 224,000 ETH, a reduction of roughly 7%.

In terms of execution strategy, this selling down is highly transparent and planned. Vitalik is not conducting large-scale selloffs on centralized exchanges; instead, he executes in batches and small lots through the decentralized trading aggregator CoW Protocol, with the daily average sold amount at only about 0.18% of ETH’s daily trading volume. This operating approach greatly reduces market impact.

However, the timing of the selling down aligns very closely with the downward trajectory of ETH’s price. During February, ETH fell by more than 37% within a month and even broke below the $1,900 level. Even if the sell execution is “gentle,” in a fragile market environment the founder’s selling down behavior will still be incorporated into sentiment pricing by market participants. The founder’s selling down itself is not the fundamental cause of ETH weakness, but the overlap between it and the price decline on the timeline amplifies the market’s bearish narrative.

How differences in tokenomics shape relative strength and weakness

The fundamental difference in tokenomics between Bitcoin and Ethereum is a structural factor that helps explain their relative strength and weakness.

Bitcoin’s supply curve is purely and predictably defined: the total supply is fixed at 21 million coins, and it halves every four years. The impact of new supply therefore shows a diminishing trend. This design gives BTC a natural “hard asset” property when macro uncertainty rises, and the logic for institutional capital to allocate it as a value storage tool is clear and stable.

Ethereum’s economic model is more complex. While the fee-burning mechanism introduced by EIP-1559 theoretically gives ETH deflationary potential, in practice the amount burned heavily depends on network activity. When the market enters a risk-avoidance cycle and on-chain activity decreases, the burn rate slows down, and ETH’s net issuance could turn positive. This reflexive characteristic—deflation during booms and inflation during slumps—means that ETH’s supply dynamics themselves become amplifiers of market sentiment.

In addition, Ethereum faces competitive pressure from other Layer 1 chains (such as Solana) and Layer 2 networks, and its ability to capture value as a “settlement layer” is still being continuously validated. Bitcoin has no competition at this layer, and its narrative is highly singular and solid.

Market implications of fund bifurcation and shifts in institutional behavior

The divergence in ETF fund flows is not only a reflection of Ethereum’s current weakness; it may also signal a shift in institutional behavior patterns.

Since Bitcoin ETFs were approved in 2024, they have accumulated more than 11% of the circulating BTC supply, forming a relatively stable institutional holding base. Ethereum ETFs were also approved, but their inflow scale is far less than Bitcoin’s and their volatility is higher. When macro risks rise, Ethereum ETFs tend to be the first targets from which funds are withdrawn, reflecting that institutional investors are positioning them as a “high beta asset” rather than a core allocation.

More importantly, March 26 was the first time since 2026 that Bitcoin, Ethereum, and Solana spot ETFs all recorded net outflows on the same day. This phenomenon suggests a trend that may be forming: amid worsening macro uncertainty, institutional capital is reducing its overall exposure to crypto assets in sync, and because Ethereum has higher volatility and larger drawdowns, it has become the first choice for de-risking and trimming positions.

If this trend continues, Ethereum may face a structural challenge: its price discovery mechanism is gradually shifting from being retail-driven to being institutional-driven, but institutional appetite for allocating to ETH and the stability of those allocations are still not as strong as for BTC. This implies that Ethereum’s valuation central point could face a systematic downward shift.

Future scenario projections and potential risks

Based on current structural constraints, there are several possible paths for how the ETH/BTC ratio could evolve in the future.

First scenario: the ratio bottoms around 0.030 and waits for catalysts. Analyst Michael van de Poppe compares the ETH/BTC chart with the Renminbi (RMB) price action and finds that both showed overlapping bottoms in 2016, 2019, and early 2025. After each low, the crypto market experienced a relatively long period of growth. If historical patterns repeat, the current consolidation around 0.030 could be the starting point of a new relative-strength cycle.

Second scenario: the ratio breaks below 0.030 and searches further downward for support. Trigger conditions for this scenario include: macro risk-avoidance sentiment continuing to heat up, Ethereum network upgrades not meeting expectations, or Layer 2 solutions diluting mainnet value more than the market expects. From a technical analysis perspective, the 0.03000 level is considered the key dividing line between “bottoming and accumulation” and “a downtrend continuation.” Once this level is effectively broken, the market structure would likely tilt toward further weakness.

Third scenario: Bitcoin breaks through a key resistance level, lifting the ETH dollar price, and thereby pushing the ETH/BTC ratio to recover. Analyst Daan Crypto Trades points out that BTC’s effective breakout above $72,000 and ETH holding above $2,200 are prerequisites for the ETH/BTC ratio to reclaim 0.032. In the current environment, realizing this scenario would require a significant improvement in macro conditions.

Regarding potential risks, the items worth watching include: if ETF outflows that are currently short-term phenomena evolve into a long-term trend, it could trigger a systemic repricing of Ethereum valuations; while Vitalik’s selling down has basically been completed, the remaining holdings of about 224,000 ETH may still become a narrative pressure point that the market continues to focus on. Also, if ETH’s price further breaks below the $2,000 psychological level, it could trigger larger-scale leveraged liquidations and forced closures.

Summary

The ETH/BTC ratio falling to 0.0302 is a concentrated reflection of Ethereum’s structural weakness over the past nine months. Behind this trend are the combined effects of institutional capital continuously flowing out of ETH products, narrative pressure from founder selling down, and Bitcoin’s relatively stronger “digital gold” narrative in a risk-avoidance environment. However, Ethereum is currently at a multi-year low ratio level, which also means its valuation relative to BTC has entered a historically compressed range. The 0.030 threshold is both a line of risk and a key observation point for whether Ethereum can regain relative momentum.

FAQ

Q: What does the ETH/BTC ratio falling to 0.0302 mean?

A: This ratio indicates that 1 ETH is worth 3.02% of BTC. When the ratio declines, it means ETH is performing weaker relative to BTC and market capital is more inclined to hold Bitcoin.

Q: Why did the ETH ETF see continuous net outflows?

A: The main reasons include ETH having higher volatility than BTC, a larger drawdown magnitude, and—under macro risk-avoidance conditions—institutional investors tending to reduce exposure to high-risk assets.

Q: How much impact does Vitalik Buterin’s selling down have on the ETH price?

A: Vitalik’s selling down is carried out in batches and small amounts; the average daily sold amount is only about 0.18% of ETH’s daily trading volume, so the actual market impact is limited. But his selling down behavior has been amplified by the market at the sentiment level and resonates narratively due to its alignment with the timeline of the price decline.

Q: What could be the future direction of the ETH/BTC ratio?

A: Three main scenarios: bottoming and waiting for catalysts around 0.030, breaking below 0.030 and moving lower to look for support, or BTC breaking through a key resistance level and driving a ratio repair. 0.030 is the key dividing line that distinguishes these scenarios.

Q: Is there still a possibility for Ethereum to outperform Bitcoin?

A: Ethereum’s potential structural advantages include its market leadership in stablecoins, DeFi, and real-world assets, as well as improved scalability from network upgrades. But in the short term, for the ETH/BTC ratio to repair, it requires a dual combination: BTC breaking through key resistance levels and macro conditions improving.