Bitwise Study Shows Ethereum Still Traded as Bitcoin Proxy

TL;DR

• Bitwise says Ethereum still trades mainly as a Bitcoin proxy, helping explain why ETH remains about 62% below its all-time high despite stronger fundamentals.
• BTC explains roughly 65% of Ethereum’s return variance, while financial conditions, active addresses and ETF flows matter, but remain secondary drivers across market cycles.
• During stress periods, ETH behaves even more like leveraged Bitcoin, although Bitwise noted brief exceptions such as May 2021 for Ethereum pricing

Ethereum has spent years adding institutional access, sharpening regulatory clarity and anchoring stablecoin and tokenized-asset activity, yet its price trails that progress. The real disconnect, Bitwise argues, is Ethereum’s market identity. In a factor-model study built on 406 weekly observations since May 2018, the asset manager concluded that ETH has traded mainly as a Bitcoin proxy rather than as a network valued on its own fundamentals. That helps explain why Ethereum remains about 62% below its all-time high even as the network’s role in digital finance has continued to expand across increasingly institutional market channels.

Bitwise’s core conclusion is stark: Bitcoin is still the engine under Ethereum’s hood. According to the analysis, ETH moves nearly 1:1 with BTC on a weekly basis, with a coefficient of about 0.99. Bitcoin alone accounts for roughly 65% of Ethereum’s return variance, making it the dominant force in price direction. That finding challenges the belief that adoption trends or business-like metrics should be doing more of the heavy lifting. Instead, Ethereum appears to be priced less like a cash-flow story and more like a network commodity riding broader crypto beta across changing cycles too.

Bitcoin’s influence is not the whole story, but the supporting drivers remain clearly secondary. Financial conditions, network activity and ETF flows matter, just not equally. Bitwise ranked the Bloomberg US Financial Conditions Index as the second most important factor, with average explanatory power of 11.3% and peaks near 40%. Active addresses averaged 6% explanatory power and climbed as high as 30% in stronger periods. ETF flows carried only a roughly 0.01 coefficient, yet still explained about 10% of ETH variance on average and up to 40% at peak during especially forceful market swings overall there.

Market stress made the hierarchy even more obvious. When conditions turn extreme, Ethereum behaves even more like leveraged Bitcoin. Between June and August 2025, Bitwise said ETH’s BTC coefficient rose to between 1.5 and 1.6 as Bitcoin neared fresh highs. In the second half of 2022, during the post-FTX stress period, returns were explained by BTC up to 90%, while every other factor turned negative. Bitwise did note exceptions, including May 2021, but said those windows were episodic. Even now, Ethereum’s institutional relevance is deepening faster than its price independence in the market today still.