$ETH The divergence between Ethereum and Bitcoin has become truly remarkable in recent days. ETH has risen over eleven percent in the last seven days, reaching around $1,756, and the daily moving average shows a bullish alignment, something that cannot currently be said for Bitcoin.

What is truly striking is that despite this strong rise, market sentiment remains almost evenly divided. While the price has risen eleven percent in a week, sentiment remains undecided, which is a significant detail. It's a known market fact that rallies met with skepticism tend to continue, while rallies that everyone believes in usually peak. Volume also tells an interesting story; the expansion of volume during dips indicates panic selling, and panic selling within an uptrend can actually be interpreted as a bullish signal, as strong hands absorb these sales while weak hands exit.

The fundamental contradiction here lies between short-term overbought conditions and a medium-term bullish structure. The 15-minute RSI is at 70, this overbought region, and there is a bearish divergence in both the 4-hour and daily MACDs. So a pullback is definitely possible. But the trend itself is clear, the 4-hour and daily moving averages are bullish, the ETH/BTC pair is rising, and ETF inflows have been consistently positive for the past two days. On July 2nd, a net inflow of $29.08 million was recorded, following $14.89 million the previous day, marking the first real recovery signal after a nine-day outflow. BlackRock's ETHA alone attracted the majority of these inflows.

It's helpful to consider different perspectives in the market. A momentum-focused approach suggests that pullbacks to the 4-hour MA20 are buying opportunities because the trend is strong. A risk-management-focused approach argues that MACD divergence is a red flag and that one should wait until this signal is clearer. Those looking at flow analysis emphasize that institutional money is currently preferring Ethereum over Bitcoin, which is the main reason for the rise in ETH/BTC. Those with opposing views see panic volume as an opportunity.

The reverse thinking exercise is also useful here. What if the divergence resolves to the downside and ETH falls to $1,700 or below? This is possible, but the trend structure suggests such a drop would be a retracement, not a full reversal. What if this dominance of ETH is a late-cycle signal, meaning money is rotating from Bitcoin to Ethereum, and then to smaller companies, and ETH is closer to a peak? This is a possibility worth watching; if the ETH/BTC pair stalls, it could be a warning sign.

The real danger right now is the complacency of trend followers. The trend is clear, but divergences are accumulating, and the end of clear trends due to divergence accumulation usually results in a sharp clearout. For those in long positions, placing a stop loss below $1,720, the 4-hour MA20 zone, and holding the position to take partial profit between $1,820 and $1,850 seems logical. For those waiting sideways, an aggressive entry would involve placing a stop-loss below $1,700 and taking the pullback to the $1,730-$1,750 range. A patient entry, on the other hand, means waiting for the MACD divergence to become clear, i.e., for the price to reach a new high and for the MACD to confirm it.

For those tracking ETH through Gate, the real question is whether this is a sustainable rotation fueled by ETF inflows, or a short-term squeeze within a broader downtrend. Current data supports the rotation thesis: ETH is outpacing Bitcoin, ETF flows are positive, and the moving average structure is bullish. The divergence is a warning, not yet a reversal signal.

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