Ethereum's ETH/BTC ratio rises 5% in Q3 as BlackRock resumes buying Bitcoin

Ethereum is beating Bitcoin to start Q3, but the return of BlackRock's BTC buying and a short-squeeze-driven recovery in the largest cryptocurrency are testing whether the rotation can last.

Ether rose 5% against Bitcoin in the first week of July, pushing the ETH/BTC ratio to a Q3 high, as BlackRock resumed buying BTC through its spot exchange-traded fund.

"Ethereum's investment narrative is becoming increasingly compelling," Tom Lee, co-founder of Fundstrat Global Advisors, said. "The ETH is money narrative likely gains traction."

The ETH/BTC ratio climbed above 0.028 on July 7, up from 0.0267 at the end of June, CoinGecko data show. Ether traded at $1,770, down from a two-week high of $1,830 on Monday, while Bitcoin changed hands near $63,070 after stalling at $64,500 — its highest level in more than two weeks. The recovery followed a short-squeeze setup identified in late June, with over $500 million in leveraged positions liquidated across exchanges in 24 hours, Coinglass data show. Shorts accounted for most of the tally for a sixth straight day.

The conflicting signals — ETH outperformance against a resumption of institutional BTC buying — create a binary outcome for Q3. If BlackRock's accumulation accelerates, it could cap ETH's relative gains. But sustained strength in the ETH/BTC ratio could drive capital rotation into the second-largest cryptocurrency, with the July 28-29 Federal Open Market Committee meeting as the next macro catalyst.

Tom Lee's Thesis Faces Its First Test

Lee has argued that three structural trends favor Ethereum gaining relative to Bitcoin during the second half of 2026: expanding stablecoin adoption, continued tokenization of real-world assets, and new Ethereum-based corporate spin-offs. He also cited the progress of the CLARITY Act and the implementation of the GENIUS Act as tailwinds for the broader crypto market structure.

"Ethereum has been under selling pressure because of rising oil prices, which is the biggest headwind," Lee said in May, describing the weakness as "short-term tactical noise." He reiterated in a CNBC interview that "the thesis for Bitcoin or Ethereum is absolutely not broken."

The data shows why the thesis is under pressure. Bitcoin's market cap stands at $1.28 trillion, more than six times Ethereum's $208 billion, CoinGecko data show. Bitcoin dominance has risen to 56.2% of the total crypto market cap, up from 59.1% in Q1 2025, as capital retreated toward the largest asset during the drawdown. Ethereum sits 65.1% below its all-time high of $4,946.05 set in August 2025, compared with Bitcoin's 49.2% drawdown from its $126,080 peak in October 2025.

Flows, Not Narratives, Decide the Quarter

The transmission chain for Q3 is clear: macro data drives Fed expectations, which drive ETF flows, which drive price. US spot Bitcoin ETF flows flipped positive at $46.6 million in the first week of July after a record $4.5 billion outflow in June — the funds' worst month since their January 2024 launch, FinanceFeeds data show. The June selloff dragged Bitcoin from about $70,000 to $58,000, its lowest since 2024.

Bitcoin's futures open interest has slipped to 740,000 BTC from a July 3 high of 776,000 BTC, Coinglass data show, signaling that derivative traders are not participating in the price rise. The CME CF Bitcoin Volatility Index fell to 40.66 on July 5, with realized volatility at about 35.7 — levels that typically precede a sharp move in the direction of the next macro surprise.

For Ethereum, the path depends on whether the ETH/BTC ratio can hold above 0.028. A sustained break higher would confirm the rotation and open the door to the 0.032 level last seen in April. A failure would reinforce Bitcoin dominance and push the ratio back toward the 0.025 support tested in June.

This article is for informational purposes only and does not constitute investment advice.