As the market enters a new quarter, predictions around the final targets for the second quarter are starting to improve.
However, to assess the potential direction, it is important to look back. The first quarter was bearish, with Bitcoin [BTC] a 22.2% close, the worst quarterly performance since 2018.
Ethereum [ETH]meanwhile ended the quarter with a loss of 29.36%, although still an improvement from the 45.41% losses in the first quarter of 2025.
However, if we take the 2025 cycle as a base, Ethereum’s 36.48% rally in the second quarter outperformed Bitcoin by about 1.2x, highlighting ETH’s stronger recovery. That said, a recent CryptoQuant report suggests that this trend may already be unfolding, with March leading the shift.
During the month, Bitcoin posted a marginal gain of +1.83%, while Ethereum rose +7.12%, indicating a clear capital rotation.
At the same time, Bitcoin’s market cap shrank slightly (-0.43%), while Ethereum grew (+2.97%), reinforcing the story of capital shifting towards higher beta assets.
In particular, this difference is further validated in supply-side dynamics.
For example, Ethereum’s continued outflows indicate a gradual shift toward long-term ownership. Moreover, on-chain data further supports this: the Coinbase Premium Gap is improving, indicating early recovery.
Meanwhile, Ethereum’s active addresses continue to rise, indicating rising network usage.
Essentially, the rise in the ETH/BTC ratio to 5.15% in March was not a fluke. Instead, it was driven by a mix of rotational flows, tighter supply dynamics and an improvement in activity in the chain.
This of course brings us to the most important question: is there any indication that Ethereum will outperform Bitcoin in the second quarter?
Institutional flows are starting to catch up with Ethereum’s fundamentals
Ethereum’s power is not always fully utilized by short-term technical price action.
Instead, price often lags behind underlying fundamentals. The logic is simple: in DeFi, increased network activity directly translates into increased demand for ETH. However, this demand is not immediately reflected in price action.
Instead, it first accumulates in the chain before eventually being priced in by the market.
Looking at the recent CryptoQuant report, Ethereum seems to be getting closer to this phase. As the data shows, the 7-day SMA of Ethereum’s ‘Total Transfer Count’ has once again risen above 1.3 million, reaching levels last seen at the all-time high in mid-February.
For context, a high 7-day SMA of ‘Total Transfer Count’ typically indicates increased on-chain activity, reflecting stronger usage across transfers, trading, and DeFi interactions.
Even more important are the recent accumulation trends institutional participation This underlying network strength may be starting to be overtaken.
Now, combined with the rising Coinbase Premium Index, increasing active addresses and stronger capital flows observed in March, the picture is becoming more constructive.
These indicators “collectively” point to demand in the chain, with both private and institutional participation showing early signs of coordination.
Taken together, this signals the early formation of a base for an ETH/BTC Q2 rotation, with Ethereum increasingly well positioned to outperform Bitcoin in the second quarter.
Final summary
- March’s capital rotation and improving ETH/BTC flows indicate an early-stage positioning shift toward Ethereum.
- Rising transfer activity, improving Coinbase Premium, and higher active addresses indicate stronger on-chain demand, paving the way for Ethereum outperformance in the second quarter.