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Ethereum leads by 7% over Bitcoin, up 10.22% week over week to hit a new rebound high—are the recovery signals here, or is it just short-term rotation?

In July, the crypto market saw a long-awaited rebound. As of July 16, Ethereum (ETH) has gained about 10.22% over the past week, while Bitcoin (BTC) rose only about 3% over the same period. After the CPI data was released on July 15, Ethereum surged more than 6% in a single day to about $1,890, while Bitcoin rose only slightly more than 4% that day. At the time of writing, Ethereum’s latest price was $1,829, down 4.27% over 24 hours, with a market cap of $221.8 billion. Is this a recovery signal for a trend reversal, or just a temporary short-term rotation?

1. The driving force behind Ethereum’s 10.22% weekly lead

Ethereum leads by 7% over Bitcoin, with a 10.22% weekly gain that marks a new rebound high. I believe the core drivers of this rebound come from both the macro and capital sides.

Macro layer

U.S. June CPI fell 0.4% month over month, the biggest single-month drop since April 2020. Inflation cooling more than expected strengthened expectations that the Fed would keep rates unchanged in July, driving a clear rebound in risk appetite, with the crypto market becoming a major beneficiary. As risk appetite rebounded sharply, Bitcoin rose from around $62k to $64.9k; Ethereum jumped 7% to $1,884, and about $300 million worth of short positions were liquidated.

Capital layer: key divergence

In the first week of July, Ethereum spot ETFs saw weekly inflows of about $187 million. The market recorded inflows for 16 straight trading days, totaling over $1.8 billion; over the same period, Bitcoin ETFs had net outflows of about $325 million. On July 16, Ethereum spot ETFs posted a single-day net inflow of $53.83 million, of which BlackRock’s ETHA accounted for $45.29 million.

As of July 15, Ethereum spot ETF total net asset value reached $62k, and cumulative net inflows historically have already hit $11.07 billion.

Notably, in the first three trading days of this week (July 13 to 15), U.S. spot Ethereum ETFs accumulated inflows of about $96 million, surpassing last week’s full-week inflow scale of $84 million.

We believe the divergence in capital moving from Bitcoin ETFs to Ethereum ETFs is the most worth-watching signal behind Ethereum’s leading performance in this round. This is not a simple broad market upswing, but rather institutional capital selectively repositioning.

2. ETH/BTC ratio breaks out: structural shift or technical rebound?

Against the backdrop of Ethereum leading by 7% over Bitcoin and gaining 10.22% week over week to set a new rebound high, the key indicator to judge whether Ethereum’s rebound is substantive is the ETH/BTC ratio. On July 3, the ratio briefly tested 0.035, the highest level since 2026; as of the week of July 16, the ratio rose another 6.14% to 0.02971.

I believe this breakout carries technical significance.

The ETH/BTC ratio has broken through a downward trendline that has suppressed it for 301 days. From the end of 2025 through the first half of 2026, ETH/BTC had been moving inside a downchannel; recently, after successfully holding the 0.0252 support zone, it achieved this crucial breakout.

Analysts broadly believe that if the weekly close confirms holding above 0.035, the probability of a sustainable rotation led by Ethereum would increase significantly. We also note that Sharplink’s research head, Steven Ehrlich, added a historical perspective: from 2020 to 2025, when Ethereum rose in July, its average upside was about 43%, while in down years its average decline was only about 5%.

We believe this asymmetry between up and down—“winning more than losing”—provides statistical support for July’s strong showing.

But it’s worth noting that on July 17 Ethereum pulled back to about $1,875, suggesting that profit-taking pressure from short-term rotation has begun to show.

Recovery signal, or short-term rotation?

Returning to the original question: with Ethereum leading by 7% over Bitcoin, up 10.22% week over week to a new rebound high, is it a recovery signal or short-term rotation? Based on the available data, we can assess the nature of this market move from three dimensions:

First, the persistence of institutional behavior

In the week of July 6 to 10, Ethereum spot ETFs saw weekly inflows of about $84.42 million, ending the prior streak of 8 straight weeks of capital outflows. Total net inflows were $58.3385 million on July 14; total net inflows were $53.83 million on July 15, with BlackRock’s ETHA alone accounting for $45.2916 million, representing more than 84% of total inflows that day. BlackRock’s ETHA has reached total historical net inflows of $64.9k. As of July 15, Ethereum spot ETFs’ cumulative historical net inflows have reached $11.07 billion.

However, on July 16, Ethereum spot ETFs recorded a net outflow of $28.04 million, indicating that the consistency of inflows still fluctuates. As long as this trend continues, Ethereum’s lead would have fundamental support; but the back-and-forth in day-to-day data also reminds us not to draw conclusions too early.

Second, confirmation of the ETH/BTC ratio

Our analysis suggests that only a weekly close above 0.035 is the key signal confirming a structural shift of capital from Bitcoin to Ethereum. Currently, this ratio has not firmly held above that level. Although it tested 0.035 on July 3, by the week of July 16 it had fallen back to 0.02971.

From a technical standpoint, ETH/BTC is approaching a breakout of the Ichimoku Kinko Cloud. Layered above it is a heavy red cloud, plus a downward trendline that has been in place since late 2025 to now. In other words, the drop from 0.035 to 0.02971 indicates that sell pressure overhead remains heavy; the effectiveness of any breakout still needs validation through a weekly close.

Third, deeper improvement in fundamentals

On-chain data shows that the number of Ethereum smart contract deployments surged 303% compared with the 90-day average. Past on-chain history shows that in the first quarter of 2024 and after a few deployment spikes in mid-2025, ETH rose by 40% or more within the following eight weeks.

I believe the upcoming Glamsterdam upgrade is another important catalyst.

According to the Ethereum Foundation, the upgrade is expected to be deployed to the mainnet around September 16, 2026. The block gas limit will be raised significantly from 60 million to 200 million, targeting an increase in network transaction capacity to 10,000 TPS, and reducing Layer 2 rollup fees by about 70%.

Conclusion

So, is Ethereum today a recovery signal or a short-term rotation?

I believe this round of Ethereum outperformance has both recovery-signal and short-term-rotation characteristics at the same time. Sustained institutional inflows and fundamental improvement make it more sustainable than a purely sentiment-driven rebound; however, the ETH/BTC ratio has not yet completed the key breakout, and short-term profit-taking pressure cannot be ignored. This looks more like early probing of a structural rotation—the answers will come from ETF fund flows toward the next 1–2 weeks and the ETH/BTC trajectory.