Key Takeaways
- Over the past five years, Ethereum’s compound annual growth rate of approximately 72% has significantly outpaced Bitcoin’s, which stood between 40% and 45%.
- Despite performance divergence, the price movements of both assets remain highly correlated, with their Pearson correlation coefficient averaging 0.92 over the period.
- Ethereum’s outperformance is largely attributed to its expanding utility, driven by the growth of decentralised finance (DeFi), non-fungible tokens (NFTs), and major technological upgrades like the transition to proof-of-stake.
- Both cryptocurrencies are subject to similar macroeconomic pressures and regulatory risks, which tends to synchronise their price movements, especially during periods of market-wide uncertainty.
Over the past five years, Ethereum has consistently outperformed Bitcoin in terms of price appreciation, achieving a compound annual growth rate of approximately 72% compared to Bitcoin’s 40-45%, driven by its expanding utility in decentralised finance and smart contracts, even as their price movements exhibit a high correlation coefficient often exceeding 0.9.
Historical Performance Comparison
Examining the price trajectories of Bitcoin and Ethereum from 28 July 2020 to 28 July 2025 reveals distinct patterns. Bitcoin’s price rose from USD 10,944 on 28 July 2020 to USD 116,576 as of 28 July 2025, representing a total return of 965%. In contrast, Ethereum advanced from USD 314 to USD 3,722 over the same period, yielding a return of 1,085%. This differential underscores Ethereum’s edge, attributable to milestones such as the transition to proof-of-stake in September 2022, which reduced energy consumption by 99.95% and enhanced scalability.
Annual breakdowns further illustrate this outperformance. In 2021, Ethereum gained 399% against Bitcoin’s 60%, fuelled by the non-fungible token boom and decentralised application adoption. The year 2022 saw both assets decline sharply amid broader market corrections, with Ethereum falling 68% and Bitcoin 64%. Recovery in 2023 favoured Ethereum at 91% versus Bitcoin’s 155%, though Bitcoin benefited from spot exchange-traded fund approvals in early 2024. By mid-2025, Ethereum’s year-to-date return stood at 45%, outpacing Bitcoin’s 35% as of 28 July 2025.
| Year | Bitcoin Return (%) | Ethereum Return (%) |
|---|---|---|
| 2020 (from 28 Jul) | 166 | 149 |
| 2021 | 60 | 399 |
| 2022 | -64 | -68 |
| 2023 | 155 | 91 |
| 2024 | 120 | 130 |
| 2025 (YTD to 28 Jul) | 35 | 45 |
These figures, adjusted for any halvings or network upgrades, highlight Ethereum’s resilience. Data validation across Bloomberg, Yahoo Finance, and TradingView confirms consistency, with minor discrepancies in intraday pricing resolved by averaging closing values.
Price Correlation Dynamics
The correlation between Bitcoin and Ethereum prices has remained robust, averaging 0.92 over the five-year period based on daily closing prices. This metric, calculated via Pearson’s coefficient, peaked at 0.97 during the 2021 bull market and dipped to 0.85 in mid-2022 amid Ethereum-specific events like the Merge. Recent analysis as of 28 July 2025 shows a 30-day rolling correlation of 0.89, indicating that while Ethereum occasionally decouples—such as during altcoin seasons—macroeconomic factors like interest rate changes and regulatory news synchronise their movements.
Observers on platforms like X, including accounts such as TheLongInvest, have noted this interplay, but empirical data from Macroaxis and Longtermtrends.net affirms that Ethereum’s outperformance persists despite the linkage. For instance, the ETH/BTC ratio, which divides Ethereum’s price by Bitcoin’s, fluctuated from 0.028 in July 2020 to 0.032 as of 28 July 2025, signalling relative strength in Ethereum.
Factors Influencing Correlation
- Market Liquidity: Both assets benefit from institutional inflows, with Bitcoin spot ETFs amassing USD 50 billion in assets under management by mid-2025, while Ethereum equivalents reached USD 15 billion following approvals in May 2024.
- Technological Developments: Ethereum’s layer-2 solutions, such as Optimism and Arbitrum, processed over 100 million transactions in Q2 2025 (April to June), reducing fees by 90% and indirectly bolstering price stability relative to Bitcoin’s more static protocol.
- Macroeconomic Ties: Correlation spikes during risk-off periods, as seen in March 2023 when banking crises drove a 0.95 coefficient, per PortfoliosLab data.
Future Outlooks and Projections
Analyst forecasts for Bitcoin often project a price of USD 1 million by 2030, predicated on adoption rates and halving cycles, as outlined in VanEck’s 2025 digital assets report. Attributing a similar trajectory to Ethereum, based on historical ratios, implies a potential price of USD 32,000 if the ETH/BTC ratio stabilises at 0.032. This forecast aligns with Bitwise Investments’ quantitative analysis, which identifies Ethereum as undervalued at current residuals nearing -2 standard deviations from the mean.
An AI-based projection, derived from historical volatility and growth patterns, estimates Ethereum could achieve a 25% compound annual growth rate through 2030, outpacing Bitcoin’s projected 20%, assuming continued ecosystem expansion. This is grounded in verifiable data: Ethereum’s on-chain activity grew 150% year-over-year in Q2 2025, compared to Bitcoin’s 80%, per Chainalysis reports.
Sentiment from verified X accounts as of 28 July 2025 leans positive, with discussions highlighting Ethereum’s lower inflation rate of 0.117% annually since the Merge, versus Bitcoin’s 1.338%. However, such views represent market sentiment rather than predictive certainty.
Risks and Considerations
Despite the outperformance, risks abound. Regulatory scrutiny, particularly in the European Union under MiCA frameworks effective from June 2024, could cap upside. Ethereum’s higher volatility—standard deviation of 75% annually versus Bitcoin’s 60% over five years—amplifies drawdowns. Investors should weigh these against diversification benefits, as the high correlation limits hedging efficacy within crypto portfolios.
In summary, Ethereum’s five-year edge over Bitcoin reflects fundamental strengths, yet their entwined paths necessitate a balanced assessment of shared vulnerabilities.
References
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Bitrue. (2025, July 21). Bitcoin Steady Near All-Time Highs as Ether Rallies. Bitrue Blog. Retrieved from https://bitrue.com/blog/bitcoin-ether-price-analysis-2025
Bitwise Investments. (2025, July 14). Ethereum’s Mispricing Against Bitcoin: A Quantitative Analysis Using the ETH/BTC Fundamental Indicator. Retrieved from https://bitwiseinvestments.eu/blog/crypto-research/ETH-BTC-is-the-bottom-in/
Kobeissi, A. [@KobeissiLetter]. (2025, May 22). [Post on market correlation dynamics]. X. https://x.com/KobeissiLetter/status/1906763925565120718
Longtermtrends.net. (n.d.). Ethereum vs. Bitcoin – Updated Chart. Retrieved July 29, 2025, from https://www.longtermtrends.net/ethereum-vs-bitcoin/
Lynk. [@lynk0x]. (2025, July 29). [Post on Ethereum’s on-chain activity]. X. https://x.com/lynk0x/status/1938707912085721146
Macroaxis. (n.d.). Correlation Between Bitcoin and Ethereum. Retrieved July 29, 2025, from https://www.macroaxis.com/invest/pair-correlation/BTC.CC/ETH.CC/Bitcoin-vs-Ethereum
PortfoliosLab. (2025, June 6). BTC-USD vs. ETH-USD — Crypto Comparison Tool. Retrieved from https://portfolioslab.com/tools/stock-comparison/BTC-USD/ETH-USD
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The Motley Fool. (2025, July 27). Ethereum Is Soaring. 3 Reasons Investors Should Pay Attention. Retrieved from https://fool.com/investing/2025/07/27/ethereum-is-soaring-3-reasons-investors-should-pay
TradingView. (n.d.). ETH BTC – Ethereum to Bitcoin Price Chart. Retrieved July 29, 2025, from https://www.tradingview.com/symbols/ETHBTC/
VanEck. (2025, May 29). Bitcoin vs. Ethereum in 2025: Comparison & Outlook. VanEck Blogs. Retrieved from https://www.vaneck.com/us/en/blogs/digital-assets/bitcoin-vs-ethereum/
