How to Trade ETH/BTC – One of the Most Popular Crypto Pairs

Crypto trading pairs like ETH/BTC are the entry point to the digital assets sector. But it’s up to investors to build effective strategies.

Investors should adjust their techniques – long-term holding (HODLing) day trading, or swing trading – to their unique conditions.
Traders should employ strategies like favorable risk-reward ratios, proper position sizing, and stop-loss orders to manage their funds.
Crypto traders should research strategies, patterns, trends, and industry vocabulary to understand the information they encounter.
Crypto pairs are made of two digital assets that can be exchanged, the first is the base currency and the second the quoted currency.

Crypto pairs like ETH/BTC are elementary units in trading. Trading crypto pairs is similar to Forex trading, but instead of exchanging traditional currencies like dollars and euros, you trade digital currencies. This endeavor offers investing opportunities for both beginner and seasoned investors to take advantage of market movements and make a profit.

Pairs trading is a neutral trading strategy that implies taking a long position in ETH in the example above, and a short one in BTC. You aim to make a profit from the price movement between the two digital currencies.

The ETH/BTC trading pair consists of two elements:

Base currency – ETH – the first cryptocurrency listed, and the one you’re buying or selling
Quote currency – BTC – the second cryptocurrency in the pair, and the one you use to complete the transaction.

The pair’s price shows you how much BTC you need to buy one ETH, so you can easily understand the value relationship between the two assets.

blue and red line illustration — Photo by Pierre Borthiry - Peiobty on Unsplash

Now Let’s Discuss How to Trade the ETH/BTC Pair

It’s essential to understand how the crypto pair functions to make informed decisions. Ethereum isn’t yet in an altseason, but historically it rallied several times, so chances are it will do it again.

Check the Market Dynamics

When trading crypto pairs, and especially the one formed by ETH and BTC, you need to check the present trend to try to forecast its evolution. Since the Merge, the ETH/BTC pair was in a downtrend, as Ethereum underperformed in comparison to Bitcoin. But the technical indicators show that the trend might change. The Volume Oscillator and Relative Strength Index show that the pair might be subjected to a bullish divergence, so crypto traders could turn their attention towards Ethereum in the following months. This means Ethereum could head towards an outperformance.

At the start of 2025 Ethereum registers increased network activity which historically coincided with value spikes.

Research Strategies for Trading ETH/BTC

You can employ multiple strategies for this crypto pair:

Trend Trading - For this strategy you use trend-following indicators like moving averages (50-day, 200-day) and Relative Strength Index (RSI) to identify bullish or bearish trends. A golden cross (short-term MA crossing above long-term MA) may signal an ETH/BTC uptrend, while a death cross suggests a downtrend.

Range Trading - ETH/BTC often trades within a defined range, with support and resistance levels providing entry and exit points. You can buy near support and sell near resistance while monitoring volume for breakout confirmations.

Momentum Trading - By using indicators like the Moving Average Convergence Divergence (MACD) and RSI, you can identify strong price momentum and enter positions accordingly. A rising MACD histogram may indicate a bullish move, while an RSI above 70 suggests overbought conditions.

Arbitrage Trading - You can exploit price differences between ETH/BTC on different exchanges. By buying ETH/BTC where it is undervalued and selling where it is overvalued, you can capture arbitrage profits.

Market-Neutral Strategy - A market-neutral approach involves hedging by taking a long position on ETH/BTC while shorting an equivalent amount of ETH or BTC in another market. This strategy minimizes exposure to broader market movements and focuses on relative price changes.

Breakout Trading - ETH/BTC can trade in a consolidation phase before breaking out in either direction. You monitor key resistance and support levels, entering a position once the price decisively breaks through with strong volume. Stop-loss orders help manage risk if a breakout fails.

Check the Factors That Influence the ETH/BTC Price

Several factors affect the ETH/BTC exchange rate, so make sure to check them before trading:

Bitcoin Dominance (BTC.D). Bitcoin dominance measures BTC’s market capitalization as a percentage of the total crypto market. When BTC.D rises, Bitcoin generally outperforms altcoins, leading to a weaker ETH/BTC pair. Conversely, when BTC.D falls, altcoins like Ethereum tend to gain strength.
Ethereum’s Network Developments. Ethereum upgrades, such as the Ethereum 2.0 transition and scaling improvements, can boost investor confidence, drive demand for ETH and often impact ETH/BTC positively.
Macroeconomic Conditions. Broader market trends, such as interest rate changes, institutional adoption, and regulatory updates, can influence both Bitcoin and Ethereum. However, Bitcoin is often seen as a macro hedge, while Ethereum is more closely linked to DeFi and blockchain innovation.
On-Chain Metrics. Key blockchain indicators like ETH and BTC transaction volumes, active addresses, and staking data can provide insights into demand shifts between the two assets.

Make Sure to Mitigate Risk

Managing risk is crucial when trading ETH/BTC due to the volatility of both assets, and here are key risk management techniques you should use:

Stop-Loss and Take-Profit Orders

Setting stop-loss orders helps limit potential losses, while take-profit orders lock in gains. A well-placed stop-loss can protect your finances against unexpected market downturns.

Position Sizing

Allocate a reasonable percentage of your portfolio to ETH/BTC trades to avoid overexposure, ensure diversification and reduce risk.

Hedging Strategies

You can hedge ETH/BTC exposure by holding stablecoins or shorting one asset while longing the other, depending on market conditions.

Monitoring Correlations

ETH/BTC often moves in correlation with other altcoins and BTC pairs. Understand these relationships to anticipate market shifts and adjust positions accordingly.

In Conclusion

Trading the ETH/BTC pair offers opportunities to capitalize on the price dynamics between Ethereum and Bitcoin. By analyzing technical indicators, monitoring market trends, and managing risk effectively, you can navigate this trading pair successfully. Whether engaging in trend trading, range trading, momentum-based strategies, arbitrage, or breakout trading, staying informed and adaptable is key to optimizing ETH/BTC trades.