Written by: Blockchain Knight
As the geopolitical tensions between Israel and Iran continue to escalate, putting pressure on global markets, the cryptocurrency market has shown a divergent trend. Ethereum has significantly outperformed Bitcoin, breaking the usual pattern where BTC leads as a safe-haven asset during geopolitical risks.
Data shows that since early March, Ethereum has risen by 18% against the US dollar, while Bitcoin has only increased by 13% during the same period. The ETH/BTC exchange rate has surged by 7.6% over three weeks, climbing from 0.0293 to 0.0315, and is on track for its first monthly gain since August 2025.
This rally coincides with macro pressures from soaring crude oil prices and tightening inflation expectations. Ethereum's strength against the trend is primarily driven by three factors: the return of institutional capital, a recovery in speculative demand, and strong network fundamentals.
The massive influx of Wall Street capital is the core driver behind ETH's strength. After a period of weak sentiment, institutional funds are accelerating their return to Ethereum. Nine spot ETH ETFs saw net inflows exceeding $160 million in a single week, hitting a new high since mid-January, with an additional $35.9 million inflow on March 16 alone.
BlackRock's launch of an ETH staking ETF further ignited the market. With an initial seed capital of $104.7 million and an additional $45.7 million inflow in the two days following its listing, it allows traditional investors to profit from both price appreciation and staking rewards, meeting institutional asset allocation needs.
Additionally, BitMine has accelerated its accumulation of ETH, purchasing over 100,000 tokens in the first two weeks of this month, bringing its total holdings close to 4.6 million. The company still plans to acquire 5% of ETH's total supply, replicating the strategy of listed companies hoarding BTC.
The recent market flash crash led to nearly $19 billion in leveraged liquidations, causing ETH's leverage ratio to plummet by 27%. However, the leverage ratio has gradually recovered recently, with the risk appetite index bottoming out and speculative funds cautiously entering the market.
Meanwhile, ETH inflows to exchanges have dropped to their lowest level since May 2025, with a large number of tokens being transferred to private wallets and staking contracts. This has reduced the circulating supply and significantly lowered selling pressure, making price rallies easier.
In the first quarter, Ethereum network activity surged, processing over 150 million transactions and 27.7 million active addresses. Gas consumption hit a record high, and RWA settlement volume reached $200 billion, capturing 61% of the market share and establishing Ethereum as the core platform for institutional asset tokenization.
On the monetary policy front, after Ethereum transitioned to a PoS mechanism, its annualized inflation rate stands at only 0.24%, significantly lower than Bitcoin's 1.28% post-halving, highlighting its deflationary attributes.
The combination of high network activity, low inflation, and institutional capital support has allowed ETH to break away from merely following BTC's price movements and chart its own independent course.
This indicates that the cryptocurrency market no longer views Bitcoin as the only asset with allocation value, as Ethereum's financial asset attributes are being widely recognized by Wall Street.
