For Layer-1 networks, liquidity is still one of the key differentiators in risk-off conditions.
From a technical perspective, increasing liquidity tends to line up with stronger fundamental activity. This is where capital rotates into networks with solid underlying usage. The RWA sector reaching a $30 billion all-time high despite broader volatility is a clear example of this trend playing out.
Against this backdrop, the stablecoin market cap pushing to a new all-time high adds further fuel to the narrative. In fact, data from DeFiLlama revealed that more than $3 billion has flowed into stablecoins this month alone – Pushing the total market cap to around $323 billion.
Naturally, this setup continues to look supportive for Ethereum as the dominant Layer-1 network.
The timing of these flows may have landed at a key moment for Ethereum [ETH].
From a technical standpoint, the ETH/BTC ratio is down over 8% so far in May. This marks Ethereum’s weakest monthly performance against Bitcoin [BTC] since January’s 8.14% decline. Notably, this move coincided with Ethereum’s stablecoin market cap shedding over $4 billion during the month, bringing it back to pre-October 2025 levels of around $158 billion.
In essence, Ethereum’s relative momentum versus Bitcoin has tended to move in tandem with stablecoin liquidity trends. With stablecoin market cap now hitting new all-time highs again, it will be interesting to see whether this correlation holds this time as well, potentially shifting momentum back in Ethereum’s favor.
Liquidity surge meets Ethereum pressure
Ethereum’s weakening performance against Bitcoin hasn’t been random either.
Instead, it’s being supported by softer on-chain signals. For example – According to Lookonchain data, a whale recently offloaded 20,000 ETH, adding pressure to ETH/BTC’s downside in May. BitMine quickly stepped in and bought 60,000 ETH though as ETH dipped towards $2K – A sign of strategic positioning on both sides.
More importantly, this lined up with Ethereum’s staking ratio climbing to 32.4% too – A new all-time high.
This suggested that a larger share of supply is locked into staking, tightening liquid supply even as price action stays volatile. In short, more ETH may be moving out of circulation, aligning with rising stablecoin liquidity.
Hence, against this backdrop, ETH/BTC sits at an inflection point now.
On the technical side, the ratio has posted seven straight weeks of declines, including a further 1.27% drop this week. Still, historical patterns, rising stablecoin liquidity, strategic accumulation, and steady capital deployment all seemed to point towards a higher chance of ETH/BTC stabilizing and consolidating here.
If this trend holds, stablecoin liquidity and Ethereum’s on-chain expansion could set up a stronger relative strength phase for ETH versus Bitcoin this cycle.
Final Summary
- Rising stablecoin liquidity and record ETH staking are tightening liquid supply while reinforcing Ethereum’s on-chain strength.
- If historical correlations hold, improving liquidity conditions could support ETH/BTC stabilization and a potential shift in relative momentum.