- Ethereum had another strong performance this January, drawing massive liquidity from Bitcoin.
- With higher stakes than ever before, ETH is on track to outperform Bitcoin.
As the new year begins, big changes are taking place in the cryptocurrency market. New capital is moving away from Bitcoin (BTC) as uncertainty grows following the recent crash. Investors are anxious, unsure of what will happen.
Meanwhile, the ongoing macroeconomic turmoil, particularly concerns about a looming debt crisis in the United States, is raising concerns that the Bitcoin cycle will repeat itself in 2022.
Meanwhile, Ethereum (ETH) is attracting great attention, capturing the attention of many investors with strong historical performance.
The first quarter is just around the corner and the market is fluid. Will Bitcoin or Ethereum offer the strongest returns? Now is the time to evaluate your options and decide where to place your bets.
Focus on Ethereum/Bitcoin January rally
Historical trends suggest that the first quarter is often a strong quarter for the cryptocurrency sector. While Bitcoin has been grabbing the headlines, Ethereum has continued to outperform with stronger price gains.
Around mid-January, the ETH/BTC pair typically experiences a series of green candlesticks, often signaling a surge in capital inflows into February. This year, Ethereum surged 85%, reaching $4,087 by mid-March.
Source: TradingView
But it’s not just the charts that matter. Mid-January is also an important time when the government finalizes its annual budget. And this year the stakes are higher than ever.
The pressure is mounting as the new administration plans to tackle a whopping $7 trillion in debt and cut spending. Add growth to it discussion Exceeding the debt ceiling increase puts us in a precarious situation.
Simply put, the government’s approach to solving its debt problem could lead to greater financial hardship in the future.
But will Bitcoin emerge as a safer bet?
It’s a high-risk gamble. The recent decline in Bitcoin’s ATH from $108,000 to $92,000 signals a difficult market environment in which investors are taking a cautious approach.
Retail FOMO is on hold. Hold off unless a significant drop triggers a buying frenzy. Now it is up to large companies to lead the supply shock.
With 2025 expected to be a volatile year, the answer seems clear. Bitcoin may not be a safe choice yet.
Adding to the uncertainty is Bitcoin’s long-term holder (LTH) control, which has fallen to 62.31%. On the other hand, Ethereum’s LTH is strong at 75.06%.
Source: IntoTheBlock
Bitcoin’s LTH ratio has been declining since March when BTC hit $73,000, and continues to decline after the new ATH.
Meanwhile, Ethereum continued its steady upward trend, rising to $4,000 and increasing LTH control. The message is clear. Long-term holders of Ethereum are confident and committed.
This change is important for one main reason. Retail investors often use the LTH indicator as an indicator of market confidence. Ethereum’s growing LTH base is a strong indicator of stability.
Read Ethereum (ETH) price prediction for 2025-2026
Considering Ethereum’s solid historical performance and strengthened long-term holder support in January, it is clear that Ethereum will take the lead, potentially leaving Bitcoin behind.
But the real catalyst is yet to come. Exercise caution during these high-risk months. This can set the stage for big moves throughout the year and bigger opportunities for your portfolio.