$ETH The divergence between Ethereum and Bitcoin has become quite pronounced in recent days. ETH has risen over 11% in the past seven days to around $1,756, with daily moving averages in a bullish alignment—something Bitcoin is currently unable to achieve.

What is truly striking is that despite such a strong rally, market sentiment remains nearly flat. While the price has risen 11% in a week, sentiment is still hesitant, which is an important detail. It is a well-known market fact that rallies accompanied by skepticism tend to persist, while rallies that everyone believes in usually top out. Volume also tells an interesting story: expanded volume during pullbacks indicates panic selling, but panic selling during an uptrend can actually be interpreted as a bullish signal, as strong hands absorb these sell-offs while weak hands exit.
The fundamental contradiction here lies between short-term overbought conditions and the mid-term bullish structure. The 15-minute RSI is at 70, in overbought territory, and both the 4-hour and daily MACD show bearish divergence. 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 positive for the past two days. On July 2, net inflows of $29.08 million were recorded, compared to $14.89 million the day before, marking the first real sign of recovery after nine days of outflows. BlackRock's ETHA alone attracted the majority of these inflows.
It is helpful to consider different perspectives in the market. A momentum-driven approach sees a pullback to the 4-hour MA20 as a buying opportunity, given the strong trend. A risk management-driven approach views the MACD divergence as a warning sign, suggesting waiting for this signal to become clearer. Those focused on flow analysis emphasize that institutional funds are currently favoring Ethereum over Bitcoin, which is the main reason for the ETH/BTC rally. Contrarians see the panic volume as an opportunity.
A reverse-thinking exercise is also useful here. What if the divergence develops to the downside and ETH falls to $1,700 or below? This is possible, but the trend structure suggests such a decline would be a pullback rather than a full reversal. What if this dominance by ETH is a late-cycle signal, meaning money is rotating from Bitcoin to Ethereum and then to smaller altcoins, with ETH closer to the top? This is a possibility worth watching; if the ETH/BTC pair stalls, it could be a warning sign.
The real danger right now is complacency among trend followers. The trend is clear, but divergences are accumulating, and the end of a clear trend caused by accumulating divergences often leads to sharp washouts. For long positions, it seems logical to set a stop loss below $1,720 (the 4-hour MA20 area) and take partial profits in the $1,820 to $1,850 range. For those on the sidelines, aggressive entry means setting a stop loss below $1,700 and taking the opportunity to buy on a pullback to the $1,730–$1,750 zone. On the other hand, patient entry means waiting for the MACD divergence to become clear—i.e., price making higher highs while the MACD confirms them.
For those tracking ETH via Gate, the real question is whether this is a sustainable rotation driven by ETF inflows, or a short squeeze within a broader downtrend. Current data supports the rotation thesis: ETH outperforms Bitcoin, ETF flows are positive, and the moving average structure is bullish. Divergence is a warning, but not yet a reversal signal.
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