The market isn’t even halfway through the second quarter, but quarter-end target projections are already heating up.
From a technical perspective, this momentum makes sense. After a 20.81% decline in total cryptocurrency market capitalization in the first quarter, continuing the 23.81% decline in the fourth quarter, the market recorded nearly $1.5 trillion in outflows in 180 days. This was the weakest period since the second quarter 2022 cycle.
Fast forward to now: April closes on a bullish note. The total cryptocurrency market capitalization has increased by almost 11%, with inflows of almost $250 billion. It is striking that almost 85% of these flows went to Bitcoin [BTC]making the Q2 cycle so far clearly ‘BTC led’, with multiple technical indicators clearly reflecting this structure.
Bitcoin’s dominance, for example, broke above 60%, reinforcing this shift in capital preference.
The impact was also visible on the ETH/BTC chart. The ratio fell 16% in the fourth quarter 2025 and first quarter 2026 cycle, and the second quarter continued that trend, with an additional 3.2% decline year to date. Essentially, the market continues to shift its strength towards Bitcoin, cementing its leadership over Ethereum in the current cycle.
However, the most important conclusion goes further than this trend alone. Bitcoin has also shown stronger resilience against Ethereum [ETH] in risky conditions, with the first quarter posting a 22.2% decline compared to ETH’s 29.26% decline. In fact, Bitcoin continues to attract capital in both risk-on and risk-off environments, indicating “consistent” strength across changing market regimes.
This of course begs the key question: if this trend continues, does Bitcoin now appear positioned to outperform Ethereum in the second quarter for the first time since 2023?
Expansion of liquidity supports Bitcoin’s dominance in the second quarter
Bitcoin’s strength against Ethereum in the second quarter is not a fluke so far, but is supported by an important signal on-chain.
According to DeFiLlama, the total market capitalization of stablecoins was almost $5 billion inflowand reached a new record of more than $320 billion. From a technical perspective, rising stablecoin inflows generally indicate two possible outcomes: capital either remains sidelined in a risk-free stance or turns into risky assets. Considering Bitcoin’s 13.5% gain, the data suggests that liquidity has shifted mainly to BTC.
Against this background, the diagram below takes on increasing significance. The Federal Reserve has already injected a total of $12.645 billion this month, with another $5 billion expected to flow in in the coming days. That brings total liquidity injections in April alone to $17.703 billion.
IIn essence, this could indicate a liquidity-driven environment that continues to favor risky assets, with Bitcoin emerging as the main beneficiary.
In this context, the current technical indicators carry more weight.
As previously noted, Bitcoin’s outperformance across multiple metrics, including breaking dominance above 60%, extending losses through ETH/BTC, and CoinGlass data showing Bitcoin’s resilience in both risk-on and risk-off conditions, is supported by strong on- and off-chain liquidity flows.
Accordingly, while liquidity continues to favor Bitcoin and translates into technical outperformance, the odds are naturally tilting in BTC’s favor. With the additional liquidity inflow in May, Bitcoin remains well positioned to outperform Ethereum for the remainder of the second quarter. This, in turn, could potentially mark the first second-quarter ETH/BTC breakdown since 2023.
Final summary
- The influx of liquidity and the increasing dominance of BTC shows that capital in Bitcoin is flowing into Ethereum.
- ETH/BTC’s weakness and Bitcoin’s resilience suggested that Bitcoin could continue to outperform in the second quarter.