Ethereum’s price has spent most of the last cycle slowing its institutional and on-chain progress, and Bitwise says the reason is straightforward: ETH is still traded primarily as a proxy for Bitcoin, not as a network with an underlying value. In the analysis of the new model, the asset manager found that BTC has been able to outperform ETH on a weekly basis since 2018, with major conditions, network activity and ETP flow playing secondary roles.
That finding is important because it interrupts another narrative going on in Ethereum. Regulatory clarity has improved, institutional access has expanded, and Ethereum still supports a large portion of stablecoin and tokenized-asset activity. Even though ETH remains about 62% below its all-time high, Bitwise’s breakout is set to explain the model based on the 406 weekly observations going back to May 2018.
The answer, at least statistically, is that Bitcoin outperforms everything. Bitwise said that ETH “moves about 1:1 with BTC on a weekly basis,” with a coefficient of about 0.99. BTC alone explains about 65% of the variation in Ethereum’s return, making it the clear main driver of price direction.
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The broader conclusion of the company is wrong. “Fundamentals of discovery, such as active addresses, apparently have less impact on Ethereum’s value than many think,” the report said. “Extending this further, revenue generation appears to be less important, as it has been removed from the GETS model as ‘noise rather than sign.’ Combining both of these conclusions supports the idea that since the model’s inception in 2018, Ethereum has more value as a network-driven asset than a fixed-income entity. “
Other Factors Affecting the Price of Ethereum
That framework continues throughout the report. Financial conditions, measured by the Bloomberg US Financial Conditions Index, emerged as the second most important explanatory variable. Bitwise gave the factor a coefficient of about 0.05, with an explanatory power of 11.3%, although that rose to about 40% in the highest periods. The network function, made up of functional addresses, had a small coefficient near 0.03 and an explanatory power of 6%, rising to 30% for the stronger categories.
ETF flows showed a different pattern. Their coefficient was only around 0.01, but Bitwise said they were “very significant,” explaining about 10% of ETH’s variance on average and up to 40% at the top. In other words, the flow is consistently important, but not with the same strength as the market beta led by BTC.
That difference becomes apparent in different markets. Between June and August 2025, Bitwise said that Ethereum behaved like a concentrated Bitcoin trade, its BTC coefficient increased to between 1.5 and 1.6 as BTC approached new highs.
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During the post-FTX stress period in the second half of 2022, volatility became even more difficult: “All factors except BTC carried a negative coefficient as returns were explained up to 90% by BTC. In times like these, cash is what matters. Not fundamentals, flows or macros. Therefore, ETH was focused on BTC.”
There were exceptions. Bitwise identified May 2021 as a period of low sensitivity for BTC, when Bitcoin already rose but Ethereum continued to rally as active addresses rose during the NFT boom. However, those idiosyncratic windows seem episodic rather than structural.
The report also downplays the case that a rich multivariate framework significantly improves short-term forecasting. Although the model describes historical returns well, Bitwise said its out-of-sample performance failed to beat the simpler AR(1)+BTC model. Most of the predictive value comes from Bitcoin’s exposure to price persistence, while additional factors add only limited predictive power.
That leaves Ethereum in what Bitwise calls a “puzzling position”: a network with deep institutional importance, a dominant stablecoin and token market share, and a highly concentrated street, but the value is still driven mainly by external beta.
At press time, ETH traded at $2,305.
The featured image was created with DALL.E, a chart from TradingView.com
