The ETH/BTC exchange rate is calculated by taking the current market price of one Ether (ETH) and dividing it by the current market price of one Bitcoin (BTC).
The resulting number tells us how much of a bitcoin one ether can purchase at current market values.
For example, let’s assume the price of bitcoin is $35,000 USD/coin and ether is at $2,000 USD/coin. Let’s do some math!
These calculations show us that 0.05714 bitcoins equate to 1 ether at the current market prices.
Why Is The ETH-BTC Useful?
The ETH/BTC ratio is an important metric in crypto. This ratio tells investors which crypto (either ETH or BTC) is outperforming the other, and by how much. For example, a high ETH/BTC ratio implies ether is outperforming bitcoin. When these ratios get too lopsided, a pair’s trade may be in order!
Bitcoin (BTC) has a substantially higher price than ether (ETH). Today, one ether can purchase about 0.05 of a bitcoin.
The ETH/BTC ratio is valuable because it tells us the relative performance of ether to bitcoin. A rising ETH/BTC ratio may indicate growing confidence in Ethereum, while a falling ratio might suggest a shift towards Bitcoin.
The Ethereum blockchain is capable of storing and executing smart contracts, which are the building block of Web3. Bitcoin can’t natively store smart contracts. Additionally, ether (ETH) can be staked while bitcoin (BTC) can not.