Ethereum technical analysis: indicators, ratio and network

Ethereum is not analysed the way Bitcoin is. It has no halving, no fixed issuance, and it carries a high correlation with BTC that muddies its dollar chart. Here is the full framework: which indicators work best on ETH, why the ETH/BTC ratio is mandatory, and what the network's own activity adds.

What changes relative to Bitcoin

The technical toolkit is the same —an RSI is an RSI— but the framework it is read in changes on three specific points:

• Less cycle history. Ethereum has existed since 2015; Bitcoin since 2009 and with four halvings behind it. The long-cycle analysis done on BTC has no direct equivalent on ETH.
• High correlation with BTC. The two dollar charts look very much alike. Much of what you see on the ETH chart is in fact what Bitcoin is doing, not what Ethereum is doing.
• A supply that moves. Ether issuance depends on network activity. Bitcoin has a supply schedule written in stone; Ethereum has a live variable.

Those three differences produce the practical rule: analysing ETH takes two charts and one metric. The dollar chart for market timing, the ETH/BTC chart for its own strength, and network metrics for the supply equation.

Which indicators work best on ETH

The right question is still the one from Bitcoin: not which indicator is best, but which one matches the state of the market. The difference is that on Ethereum they are worth applying twice, once on each chart.

When there is a trend

Trend tools lead: Supertrend, with dynamic support calculated on ATR, and the MA50/MA200 crossover as the background reference. Oscillators take a back seat and are kept for spotting exhaustion, never for trading against the move.

When there is a range

The RSI and Bollinger Bands lead. On ETH a band squeeze has an extra read: when the bands compress on the dollar chart and on the ETH/BTC ratio at the same time, what is coming is not just a move but most likely a change of leadership between the two assets.

In both cases

MACD supplies the acceleration read, and divergences remain the highest-quality signal technical analysis produces. And there is a risk-management detail worth not skipping: historically ETH has been more volatile than BTC, so the same position size in both assets does not carry the same risk, however alike the charts look.

The chart you cannot skip: ETH/BTC

Looking only at ETH in dollars makes the question that actually matters unanswerable: is this rally Ethereum's own strength, or Bitcoin pulling it along? The ETH/BTC ratio answers it, because it cancels the move both assets share and leaves only the difference.

Its practical use is twofold. First, it decides the split between the two large assets in a portfolio: with the ratio in a sustained downtrend, the natural weight sits in BTC. Second, it works as an early warning of rotation: historically capital leaving Bitcoin has passed through Ethereum first before moving down the capitalization ladder, so an upturn in the ratio with Bitcoin dominance falling has been one of the early signals of that rotation.

The ratio is read on daily, weekly and monthly. On short timeframes noise dominates, precisely because the two assets share most of their volatility.

The variable of its own: ether supply

Here is what has no equivalent in Bitcoin. Ethereum has no supply cap and no fixed issuance schedule: its net supply is the result of two forces that change every day.

Issuance and burn

Since EIP-1559 took effect in August 2021, part of every fee is destroyed rather than paid to whoever validates. And since the move to proof of stake in September 2022, issuance of new ETH fell sharply. The balance between what is issued and what is burned depends on activity: with the network heavily used it can be negative; with light activity, slightly positive.

Supply locked in staking

A significant share of existing ether is deposited validating the network, and that ether is not on the market. Since the Shapella upgrade of April 2023 those deposits can be withdrawn, so the figure is no longer a permanent parking lot but a two-way flow: changes in that share, and in the validator entry and exit queues, move the supply actually available.

Layer 2 activity

Much of the real usage has moved to layer 2 networks. The Dencun upgrade of March 2024 drastically cut the cost of posting data from those networks. That is excellent for adoption and for the end user, but it reduces fees paid on the base layer and with them the amount of ether destroyed. When comparing supply data from before and after that date, bear in mind the rules changed midway.

Macro context and flows

Ethereum does not trade in a vacuum either, and it shares almost all of its external context with Bitcoin: the DXY as a thermometer of global liquidity, with an inverse relationship that comes and goes depending on the year, and the Fear & Greed Index as a measure of the market's emotional state, read against the crowd.

The piece of its own is regulated product flows. Spot Bitcoin ETFs reached the US market in January 2024 and Ethereum's in July 2024, six months later and with a notably smaller flow of inflows from the outset. That imbalance in regulated demand between the two assets is one of the usual explanations for their relative behaviour, and it is followed as background context, never as an entry trigger.

How Crypto Terminal analyses Ethereum

The app applies the same battery of 18 modules to ETH as to Bitcoin and crosses their signals across six timeframes at once —1h, 4h, 1D, 3D, 1W and 1M— so you can see at a glance whether a signal runs with the bigger picture or against it. Comparing that read with Bitcoin's, and both with the dominance module, is the practical way to work the same idea the ETH/BTC ratio describes.

Three common mistakes when analysing ETH

1. Looking only at the dollar chart. Without the ETH/BTC ratio you cannot separate its own strength from Bitcoin's pull, and you end up buying Ethereum at the worst possible relative moment.
2. Importing Bitcoin's calendar. Ethereum has no halving. Using the four-year cycle as a framework for ETH borrows a structure that belongs to a different asset.
3. Treating network metrics as entry signals. Negative net supply or a rise in staking describe the underlying equation; they say nothing about what the price will do this week.

Related guides

Frequently asked questions about Ethereum