Ether (ETH) might be primed for a period of upside price action after sharply underperforming against bitcoin (BTC) in recent months. Skeptics have claimed that the emergence of layer-2 networks has seen Ethereum fall out of favor among DeFi traders, but the veri tells a different story.

Has the move begun today? Maybe, maybe not, but ether is higher by 2.5% over the past 24 hours against a very modest decline in the price of bitcoin. Alongside, $17 million worth of ether short bets were liquidated across derivatives exchanges thanks to ETH’s gain.

Prior to today, ether had been down more than 10% over the prior 6 months versus a 22% advance for bitcoin, bringing the ETH/BTC ratio to its weakest level since April 2021.

Ether itself has remained in the same trading range since early August, with the current level of $2,700 providing two firm rejections on Sep. 27 and Oct. 21. During that period bitcoin surged from below $60,000, yesterday testing its record high from March of just shy of $73,800. Ether remains about $2,000 below its record high set all the way back in November 2021.

The relative underperformance of ETH in recent month has led to widespread bearish sentiment and disappointment in the asset, which has a market cap of $322 billion. One catalyst behind the negative narrative is the abundance of layer-2 networks which are taking market share, liquidity and volume away from the main Ethereum network.

Several key metrics including new wallets and number of transactions have also continued their respective downtrends. These metrics can lead traders to heap on short positions, which can lead to a turbulent “short squeeze.”

Data from DefiLlama, however, shows that Ethereum still commands more than 55% of the total value locked (TVL) across all DeFi networks and protocols, with the figure topping $50 billion. This means that when capital flows into altcoins, ether is primed to be one of the main beneficiaries.