Altcoin Season Signal Flashes: ETH/BTC Ratio Breaks Out, Crypto Market Logic Has Changed

The signal for altcoin season has finally appeared, and the market is active again. In the past, people always watched Bitcoin for signals, but the real signal does not come from Bitcoin—it comes from Ethereum. Altcoin season has never started because Bitcoin rose. Whether in 2021 or 2017, what truly ignited altcoin season was ETH outperforming BTC. This signal has been dormant for two years, and now it has finally appeared again—Ethereum posted its largest single-day gain since May 2025, significantly outperforming Bitcoin, with nearly $3 billion in short positions liquidated within 24 hours.

Why Bitcoin Dominance Has Failed

Bitcoin Dominance (BTC Dominance) measures Bitcoin's share of the total crypto market. The traditional view holds that when this metric declines, funds are rotating from Bitcoin into altcoins. However, over the past nearly two years, this metric has provided almost no useful signal. Bitcoin dominance peaked at around 65% last June and then fell all the way to 57%. In theory, 8% of funds should have flowed out of Bitcoin and into altcoins, but the expected rotation never materialized.

The reason lies in the calculation method. Bitcoin dominance includes stablecoins in its calculation, and the total stablecoin market cap now exceeds $300 billion. The crypto market structure is completely different from the past. Changes in stablecoin supply directly cause dominance to shift, but that does not represent a rotation into altcoins. Therefore, when observing Bitcoin dominance, one should use a version that excludes stablecoins.

ETH/BTC Ratio: The True Leading Signal for Altcoin Season

Funds do not flow directly from Bitcoin to small-cap coins. They first flow into Ethereum and then gradually rotate to other altcoins. Therefore, if ETH cannot outperform BTC, altcoins as a whole will struggle. The ETH/BTC ratio bottomed in May this year and has recently broken above its long-term downtrend line with a sharp rally. This is the long-awaited signal.

Three Structural Changes in Ethereum Supply and Demand

Ethereum's fundamentals have changed significantly over the past year, and these changes together have driven ETH's strong performance.

1. Staking ETFs Approved

For a year and a half after the launch of U.S. spot Ethereum ETFs, staking was prohibited. The old SEC considered that ETH might be an unregistered security, so ETF holders could only earn returns from price movements. But on March 17 this year, the SEC clarified that ETH is not a security, and subsequently BlackRock launched its second Ethereum fund, ETHB.

BlackRock now operates two Ethereum funds with different functions: ETHA holds ETH in cold wallets, simply holding; ETHB stakes 70% to 95% of its assets through Coinbase Prime. Of the recently reported $219 million in Ethereum ETF inflows, about $173 million went into ETHA, about $36 million into ETHB, and the rest came from institutions like Fidelity. The emergence of staking ETFs allows investors to earn staking yield while holding ETH—something Bitcoin ETFs cannot offer.

2. Staking Queue and Supply Lockup

The Ethereum network now limits the rate at which validators can enter and exit to prevent mass simultaneous exits. Currently, over 2.2 million ETH are waiting in the staking queue, with a wait time of about 39 days, while exiting the network takes only 2 hours. This means any validator who wants to exit can do so quickly, yet a large amount of ETH is still choosing to enter staking. The percentage of staked ETH relative to total supply has reached a record 33.98%.

BlackRock's ETHB product page shows that unstaked ETH earns no yield, but they are still willing to wait 39 days to complete staking, earning nothing during that period. This behavior itself sends a strong bullish signal.

3. Rise of Corporate ETH Treasuries

In 2021, corporate ETH treasuries did not exist. Today, publicly listed companies collectively hold about 6.6% of the ETH supply, with one company standing out. Tom Lee's company Bitmine holds 4.8% of the ETH supply, with over 5 million ETH staked. The company began building its position from zero in June 2025, backed by well-known institutions such as Peter Thiel, Cathie Wood, Founders Fund, and Galaxy Digital.

Bitmine's purchase pace has slowed, not because confidence has weakened, but because it is only 185,000 ETH away from its 5% target. At the current pace, it will reach the target in about four months. At that point, the company will transform into a cash-flow business—its annual staking revenue is estimated at about $287 million, while its dividend obligations to stakeholders are only $35 million. Even during bear markets, Bitmine has not missed a single week of buying.

Supply-Demand Imbalance Drives ETH to Outperform BTC

Combining the above changes, the amount of ETH on Ethereum exchanges has dropped significantly, the staking rate is at an all-time high, ETFs continue to absorb supply, and publicly listed companies hold another 6.6% of the supply. The freely available ETH for purchase in the market is extremely scarce. Therefore, when macro-level positive news emerges, ETH prices react quickly and outperform Bitcoin.

Tom Lee's Thesis: Tokenization and AI Agents

Tom Lee is one of the biggest ETH bulls, and his core thesis is that the market is beginning to see the implementation of tokenization and AI agent applications, with Ethereum leading the trend. However, it should be noted that Tom Lee himself is the head of the world's largest corporate ETH treasury, so his statements inevitably carry a bias.

Looking at actual data, the infrastructure is indeed being built: BlackRock launched its first tokenized fund on Ethereum, and JPMorgan has multiple tokenized money market funds running on Ethereum. The network hosts about $148 billion in stablecoins and over $15 billion in tokenized real-world assets. On the AI agent side, ERC-8004 (Trusted Agent Standard) went live in January. This update was co-authored by the Ethereum Foundation, MetaMask, Google, and Coinbase, among others, and has already seen over 132,000 service registrations. Coinbase's payment standard processed over 165 million transactions before April, with about 480,000 active agents. Google has also adopted the standard alongside PayPal, Mastercard, and American Express.

However, real-world data does not fully support Tom Lee's optimistic thesis. Ethereum mainnet daily revenue has fallen from nearly $40 million in early 2025 to about $10 million. Tokenized assets are mostly just held statically; they are redeemed after buying and selling, not traded frequently, and generate no fees. On AI agents, the 165 million transactions total only about $50 million, averaging about $0.30 per transaction, and on-chain analysis indicates that the early surge came mainly from meme coin activity rather than agents purchasing services. Currently, about 65% of agent payments occur on Solana, not Ethereum. Thus, the tokenization and AI agent narratives have not yet truly materialized, but the infrastructure is ready and still holds future potential.

Conclusion: Watch Behavior, Not a Single Metric

Ethereum's three current changes—staking rule updates, the rise of corporate treasuries, and validator queue waiting—are all relatively new phenomena that together drive demand. Tokenization and AI agents have not yet contributed significantly to network revenue, but the infrastructure is prepared for future impact.

Investors should not focus on a single metric; they should pay attention to actual behavior. Anyone can be verbally bullish, but behavior like BlackRock willing to wait 39 days to stake ETH and earn nothing during that period is the real bullish signal. At the same time, remember that a single-day surge may confirm a breakout but does not guarantee the breakout will persist. The crypto market is extremely risky, and any investment decision should be based on thorough research. Never blindly follow the loudest voices in the market.