Tom Essaye: Rising ETH/BTC Ratio Could Signal Stock Market Volatility
Tom Essaye: Rising ETH/BTC Ratio Could Signal Stock Market Volatility
Why the S&P 500 could be at risk of a 10% to 20% pullback if ether falls behind bitcoin again
History suggests that a resurgence by Bitcoin in which it underperforms Ethereum could be a warning sign that stock-market volatility is about to increase, with the S&P 500 potentially facing a decline of 10% to 20%, according to Tom Essaye, founder and president of Sevens Report Research.
Since early July, Ether has outpaced Bitcoin by a wide margin, rising 44% compared with Bitcoin’s 4% gain after trailing the world’s largest cryptocurrency for months. Historically, a rising ETH/BTC ratio has often coincided with sharp, short-lived rallies in equities that eventually gave way to market peaks, Essaye wrote in a Thursday note.
“In 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,” Essaye said. Strong bursts in ETH/BTC have historically lined up with important turning points in equities, among them the “low-volatility” rally of 2017 that preceded the 2018 selloffs, the spike in late 2019 ahead of the 2020 pandemic crash, and the 2021 rally that gave way to the 2022 bear market, he noted.
The ETH/BTC ratio has also surged 130% from its five-year low in April this year, moving in step with the strong tech-led rebound in stocks from their early April 2025 lows, Essaye added.
The one exception came in 2023 and 2024, when Bitcoin consistently outperformed Ether even as stocks remained strong, a departure from the earlier pattern. That contrast makes the current setup especially notable. With ETH/BTC rising again, investors should watch closely in case the historical relationship reasserts itself, Essaye said.
On Aug. 24, the ETH/BTC ratio touched 0.043, its highest level since September 2024, according to FactSet. Ether has gained 38.5% year to date, including a 75.9% surge in the past three months, compared with Bitcoin’s 20.3% year-to-date rise and 6.3% gain over the past three months.
“The risk of the long-ETH/short-BTC trade becoming exhausted appears underappreciated,” Essaye warned, pointing to signs that the momentum has slowed. The uptrend in place since August could soon be tested from the technical perspective, he added.
Also, click here to view the full article published in MarketWatch on August 28th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.
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