Key takeaways
Why Are Bitcoin Traders Eyeing ETH Weakness?
Ethereum’s fading institutional momentum and DAT’s fragility are making it a tactical hedging strategy against Bitcoin.
What does this mean for BTC investors?
It highlights the structural resilience of BTC, and the poor performance of ETH indicates a possible divergence of the cycle.
In Bitcoin [BTC] In the risk aversion phase, risk management comes first.
In past cycles, traders often used altcoins (anything outside of BTC) to cushion declines near market highs, chasing the usual “high risk, high reward” setups. This time, however, that manual doesn’t work.
Instead, capital appears to be rotating into US stocks. In this context, a recent 10x Strategy Report introduced a new way to hedge BTC exposure. Interestingly, the focus still involves the largest altcoin.
Ethereum’s institutional narrative begins to crack
One of the strongest narratives of the summer was Ethereum’s DAT model.
Diving into BitMine [BMNR] has been the flagship of this trend, with over 3 million ETH in its treasury, much like how the “Strategy” narrative drove Bitcoin five years ago. But lately some cracks have started to appear.
From an investors’ perspective, BMNR stock is down 10.17% for the quarter.
Stocks have outperformed, with large-cap names like Apple [AAPL] reaching new all-time highs of around $277, showing where venture capital is rotating.
Source: TradingView (BMNR/USD)
Highlighting this, 10x Strategy pointed out the key factor behind the fallout.
The report noted that weakness in ETH’s DAT fundamentals has been a key drag on sentiment. To put it in context, BitMine’s model allowed institutions to accumulate ETH at a lower cost and then distribute it at retail at a premium.
Now, with BMNR shares under pressure, retail investors have suffered huge losses. In this context, the report suggests that shorting Ethereum could be an effective way to hedge Bitcoin, indicating a possible change in the cycle.
Favor Bitcoin’s resilience over Ethereum’s risk
The altcoin-Bitcoin correlation has been a notable divergence this cycle.
Even after BTC broke below the $110,000 support multiple times since the October sell-off, altcoin flows They have remained silent. This indicates that traders still prefer Bitcoin’s stability over chasing short-term risks.
From a technical point of view, the trend is clear. For the first time since the first quarter, Ethereum has recorded a deeper decline than Bitcoin, and the fourth quarter began with ETH trading 50% weaker, despite all the institutional accumulation.
Source: TradingView (BTC/USDT)
In this setup, shorting ETH looks like a tactical play for BTC investors.
Simply put, with retail losing interest in Ethereum’s institutional narrative, altcoin flows drying up, and Bitcoin remaining structurally sound, hedging BTC by fading ETH could prove to be a smart trade.
Therefore, the 10x strategy report makes a strong case.
The market appears to be shifting beneath the surface, and ETH’s relative weakness is beginning to act as a hedge for Bitcoin.
If so, it could become the second key divergence of this cycle, right after the rise of BTC and altcoins.
