ETH/BTC is a popular cryptocurrency trading pair that denominates the price of Ethereum in Bitcoin.
What Is ETH/BTC?
ETH/BTC is a popular cryptocurrency trading pair
that denominates the price of Ethereum
. For instance, if Ethereum is trading at $2,000 and Bitcoin is trading at $40,000, the ETH/BTC crypto trading pair will trade at 0.05. ETH/BTC works like equivalent trading pairs of fiat
currencies, such as USD/EUR (dollar to euro).
How Does ETH/BTC Work?
A cryptocurrency trading pair illustrates the cost of a cryptocurrency in a different cryptocurrency. Thus, you can understand how much ETH equals 1 BTC and vice versa. Other crypto trading pairs do also exist. However, the ETH/BTC pair is one of the most popular and liquid
crypto trading pair since it expresses the relationship between the two most valuable cryptocurrencies.
The trading pair is usually written as ETH/BTC, as BTC is the biggest cryptocurrency by market capitalization
and the de facto reserve currency of the crypto world. Equally, other crypto trading pairs are also expressed with BTC as the denominator, such as SOL/BTC and BNB/BTC. Sometimes you can also find the trading pair written the other way round, i.e., BTC/ETH.
Can You Trade ETH/BTC?
ETH/BTC is a popular trading pair for cryptocurrency traders that want to stay exposed to the cryptocurrency market only. Since the ETH/BTC ratio has historically oscillated, this gives traders an opportunity to capture fluctuations in their prices without exposing themselves to fiat currency. For instance, traders can, in this fashion, benefit from an overperformance of one currency relative to the other, irrespective of whether they are trading in a bull market
or in a bear market
. This allows traders to make nominal profits even if prices are going down.
What Is the ETH/BTC Ratio?
Historically, the ETH/BTC ratio has traded below 0.1 most of the time. This means that 1 ETH has been worth less than 0.1 BTC for most of its trading history. Since BTC is the oldest cryptocurrency, it is used as the base currency for all other crypto assets. That means the value of other cryptocurrencies is generally expressed relative to Bitcoin. Sometimes, there are also cryptocurrency trading pairs using ETH
as the base currency if the other crypto asset is from the Ethereum ecosystem
or BNB Chain ecosystem
For a brief period in the 2017 bull run
, Ethereum broke past the 0.1 resistance
and reached an all-time high
of 0.14. However, it has since declined again and is trading well below 0.1 at the time of writing. With the switch of Ethereum to proof-of-stake
, which is dubbed the Merge
, some analysts expect ETH to outperform BTC in the long run. This could prompt the so-called flippening
. However, this would require Ethereum to reach a valuation of approximately 0.17 ETH/BTC, since the supply of Bitcoin is fixed. At the time of writing, it is unclear if the ETH/BTC ratio can reach such heights. For it to reach a new all-time high and the flippening to potentially happen, several factors would need to occur.
First, Ethereum would have to significantly rise in market capitalization. This means the gap between ETH and BTC in fiat terms would have to decline. Such a development can happen through an outsized growth of the market cap of ETH or a relatively faster decline of BTC or both of the above. In this case, ETH/BTC would appreciate since one ETH would become relatively more valuable in BTC terms.
Second, Bitcoin would probably have to lose its status as the de facto reserve cryptocurrency. All cryptocurrencies are highly volatile, but Bitcoin is considered the most stable crypto asset since it has the longest history. Thus, it has been declared a digital commodity
, while opinions on Ethereum differ. Such a paradigm shift would mean the ETH/BTC rises and Ethereum overtakes Bitcoin as the most capitalized cryptocurrency in dollar terms. Even in this case, 1 ETH may be less valuable than 1 BTC, which means Bitcoin could still remain the base currency. The exact development depends on the ratio of ETH/BTC.