Market shows optimism for Ethereum based on prominent performance indicators
In a noteworthy development in the cryptocurrency market, the percentage of long-term Ethereum holders has surpassed that of Bitcoin holders for the first time, according to data from CoinGecko. This shift in investor behavior is primarily due to differing dynamics impacting each asset.
Key contributing factors include Ethereum's supply dynamics and scarcity, evolving ecosystem and use cases, shifts in institutional sentiment, Bitcoin's role as a digital gold, and profit-taking.
Ethereum's supply reduction on exchanges, which suggests more holders retaining ETH long-term rather than trading or selling it, has played a significant role in encouraging long-term holding and price appreciation expectations. The utility and institutional interest in Ethereum's smart contract ecosystem, DeFi, and stablecoins have also contributed to sustained long-term holding.
On the other hand, Bitcoin's significant price surge in 2025, driven by institutional demand and its status as an inflation hedge, may have prompted some holders to reduce longer-term positions to realize gains. Bitcoin's price volatility and market cycles can encourage shorter-term trading relative to ETH's utility-based holding incentives.
Michaël van de Poppe, founder of MN Trading and analyst, predicted that Ethereum could strengthen against Bitcoin as early as January 2024, with a breakout above the 0.4 level in the ETH/BTC pair potentially triggering an altcoin rally within Ethereum's ecosystem. CryptoQuant recently noted bullish signals for Ethereum, further supporting this prediction.
Bitcoin's dominance as a store-of-value asset with periodic profit cycle influences contrasts with Ethereum's transition into a more utility-backed asset with scarcity and activity incentives for holding. This divergence is highlighted by the increasing long-term holder percentage of Ethereum and the declining long-term holder percentage of Bitcoin.
The slower growth of Ethereum compared to Bitcoin has been linked to fund flows into Solana, driven by high transaction fees on Ethereum and the Q4 frenzy around meme coins, according to Kaiko analysts. However, Ethereum's ETF inflows grew sharply in 2025, even surpassing Bitcoin at times, indicating growing institutional participation.
In conclusion, Ethereum's increasing long-term holder percentage is likely driven by network demand, supply reduction on exchanges, and growing institutional adoption linked to its smart contract ecosystem. Bitcoin's declining long-term holder percentage reflects profit-taking amid strong recent gains and its dominant but mature market position prompting some rebalancing of holding patterns.
[1] CoinGecko [2] Kaiko [3] IntoTheBlock [4] CryptoQuant [5] Financial Times
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