What Ethereum Needs to Do Before Capital Rotates Beyond Bitcoin

Ethereum’s price action has remained restrained through January, even as several on-chain indicators show improving network engagement. Moreover, with renewed discussion around a shift toward altcoins, the data suggests the market remains in a transitional phase.

Understanding what Ethereum is signaling right now is key to separating structural improvement from premature expectations of an alt-driven expansion.

On the same note, ETH’s active addresses have been trending higher into late January. With daily activity pushing toward the upper end of its 2024 – 2025 range.

Ethereum’s On-Chain Activity Is Recovering

As of today, ETH’s transaction counts are also expanding, reaching roughly 2.3 million daily transactions. Therefore, it suggests there’s a pickup in network usage instead of a burst driven by speculation.

This matters because sustained transaction growth tends to precede stronger price trends. However, it only happens when it’s paired with rising economic throughput.

Indeed, total fees on Ethereum have stabilized after a prolonged compression phase. Yet they remain well below the peaks seen during prior expansion cycles.

Additionally, lower fees signal improved efficiency and reduced congestion, reflecting subdued demand for block space relative to earlier bull phases.

In parallel, Ethereum’s exchange netflow data shows persistent net outflows, suggesting holders are not rushing to sell, but neither are they aggressively deploying capital back into the ecosystem.

ETH/BTC Metrics Still Point to Caution

From a relative performance standpoint, Ethereum remains constrained against Bitcoin. Furthermore, the ETH/BTC pair has failed to reclaim its long-term moving averages and continues to trade below prior structural resistance zones.

Weekly structure shows a recovery from the 2025 lows, but the rebound lacks follow-through, with momentum stalling near historically reactive levels.

Ethereum dominance tells a similar story. Indeed, it rebounded modestly but remains well below the levels typically associated with sustained altcoin leadership.

This indicates that while Ethereum is no longer losing share aggressively, capital rotation away from Bitcoin remains limited.

Moreover, until ETH/BTC establishes higher highs and Ethereum dominance expands meaningfully, broader alt strength remains structurally capped.

What Ethereum Needs Before an Alt Season

On-chain participation is improving, supply pressure is low, and Ethereum’s infrastructure fundamentals remain intact. However, none of these conditions alone trigger an alt expansion.

For that to happen, three elements must align. First, Ethereum’s relative performance versus Bitcoin must strengthen decisively. Then, network demand must translate into higher economic activity, reflected through rising fee generation and not flat usage.

Finally, broader market liquidity must rotate outward from Bitcoin into altcoins, a process that typically follows, not precedes, Bitcoin-led trend resolution.

The data supports cautious optimism, but it also makes clear that an alt-driven phase remains conditional, not imminent.