Ethereum’s Q4 Reset: Is an ETH/BTC Breakout on the Horizon for Q1 2026?

In the current crypto landscape, the market is exhibiting a cautious approach, which stands out when we compare it to previous cycles. A few years ago, high volatility would have prompted investors to chase "high-risk, high-reward" opportunities. However, the Altcoin Season Index now indicates that only 12 altcoins are outperforming Bitcoin (BTC). Despite this situation, Ethereum (ETH) continues to follow a similar strategy, particularly in the derivatives market.

Key Takeaways

Ethereum has experienced a substantial drop in open interest, indicating a significant deleveraging event.
Despite current market caution, Ethereum showcases strong fundamentals across various sectors, outlining its long-term potential.
On-chain metrics for Ethereum have remained stable, with Total Value Locked (TVL) consistently hovering around $70 billion.
The resilience of Ethereum combined with current market dynamics suggests the potential for an ETH/BTC breakout as we enter Q1 2026.

Ethereum

eth Source: Alphractal

Ethereum has experienced a classic deleveraging event, with its open interest (OI) declining over 50% from its peak of $70 billion before the October crash, resulting in a leverage flush of approximately $35 billion. In contrast, Bitcoin's OI has fallen about 38% during the same timeframe. This indicates that Ethereum suffered a more significant impact, with a 1.3% decrease against Bitcoin so far in Q4, raising the question: Is Ethereum positioned for a more vigorous rebound once market sentiment shifts back to risk-taking?

Ethereum's Structural Strength Set for Q1 2026

Ethereum’s value extends beyond its current price, especially as a Layer 1 blockchain. Its robust presence in essential sectors such as decentralized finance (DeFi), real-world assets (RWA), stablecoins, traditional finance (TradFi), non-fungible tokens (NFTs), and more accentuates its long-term potential. Ethereum’s consolidation around the $3,000 mark appears to be strategically sound.

Supporting this view, after hitting $3,000 on November 17, Ethereum's on-chain metrics have shown signs of stability. For instance, its Total Value Locked (TVL) saw a $20 billion decrease in Q4, but it has since stabilized around $70 billion since November.

Ethereum Source: DeFiLlama

Similarly, Ethereum's Total Value Supply (TVS) reflects a positive trend, having reached an all-time high of 36.27 million on November 18 and remaining above 36 million since then. This data highlights that, despite market volatility, engagement with Ethereum remains stable.

When considering the leverage flush, structural resilience, and stable on-chain metrics, it appears that Ethereum's counterperformance against Bitcoin in Q4 is not a setback but rather a potential precursor to an ETH/BTC breakout heading into Q1 2026.

Final Thoughts

As we transition into the new year, Ethereum’s solid foundation and market metrics could position it well for future growth. Observers will want to keep an eye on these trends as indicators of what may come next in the cryptocurrency landscape.