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Why the long-ETH/short-BTC trade matters - INVESTING.COM
Investing.com -- Ethereum’s recent surge relative to Bitcoin is attracting the attention of cross-asset analysts, with the latest Sevens Report warning that the long-ETH/short-BTC trade may carry signals for equity markets.
“Since early July, a noteworthy dynamic began to emerge in relative performance between Bitcoin and its distant second most-popular ‘crypto cousin,’ Ethereum,” Sevens said.
Ethereum has “meaningfully outperformed Bitcoin with the Long-ETH/Short-BTC trade accelerating rapidly as both cryptos surged towards record highs.”
Sevens noted that while many traditional investors might dismiss the shift, “there is a key underlying takeaway sourced in cross-asset analysis.”
Historically, sharp ETH/BTC rallies have coincided with “squeezy yet powerful rallies in equity markets preceding near-term blowoff tops in the broader stock market.”
The firm noted that examples include the ETH/BTC rally of 2017 that preceded double-digit equity drawdowns in 2018, a 2020 move ahead of the pandemic selloff, and a surge in 2021 that foreshadowed the “Double Bear Market” of 2022.
More recently, the current “130% rally in ETH/BTC off of the 5-year lows reached in April…has obviously coincided with the resilient tech-led rally in stocks off the 2025 lows,” the note said.
Sevens highlighted that the present situation differs from 2023–2024, when Ethereum lagged while stocks posted gains. The firm cautioned that the ETH/BTC uptrend “is poised to be tested in the sessions ahead” and warned that “once the upside momentum faded from ETH/BTC rally, it would have been prudent for equity investors to put their guard up.”
“Bottom line, in prior cases over the last 10 or so years, every time we have seen such a robust and pronounced rise in the ETH/BTC crypto-pair, stocks have been sprinting higher in lockstep. However, once the upside momentum faded from ETH/BTC rally, it would have been prudent for equity investors to put their guard up,” Sevens said.
