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ethereum (eth) is currently facing significant selling pressure and fear following a 23% drop, which has pushed its price to yearly lows of $2,200. One of the main concerns for investors is the continued underperformance of eth compared to bitcoin, a trend that has persisted since September 2022. Since then, ethereum has fallen by 44% against bitcoin.
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This dramatic drop has left investors and traders wondering about the reasons behind ethereum’s struggle. A recent report from CryptoQuant offers some clarity, pointing out several factors that may be affecting eth’s performance. As market participants continue to monitor eth’s movements, many are wondering whether the asset can regain momentum or if further declines are in store in the coming weeks.
ethereum uncovered: CryptoQuant report sheds light
The recent twitter&utm_medium=sns&utm_campaign=dashboard&utm_content=crypto-weekly-report” target=”_blank” rel=”nofollow”>CryptoQuant Report provides clarity on the factors currently affecting ethereum (eth). Declining on-chain activity, reduced institutional interest, and the disappointing performance of ethereum ETFs compared to bitcoin are among the major contributors to ethereum’s struggles, with the eth/btc pair now at 0.0425, its lowest level since April 2021.
ethereum’s poor performance appears to be related to weaker network activity dynamics compared to bitcoin. For example, ethereum’s total transaction fees have continued to decline, largely attributed to lower fees following the Dencun upgrade. The relative transaction count has also fallen sharply, dropping from an all-time high of 27 in June 2021 to 11, one of the lowest levels since July 2020.
Moreover, the dynamics of ethereum supply do not favor a price increase. Since the beginning of April, the total supply of eth has been growing steadily following the Dencun upgrade. The current supply stands at 120.323 million eth, the highest level since May 2023.
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Additionally, traders and investors have shown a clear preference for bitcoin over ethereum, as the relative spot trading volume of eth to bitcoin has fallen from 1.6 to 0.76 over the past week. ethereum’s price has historically risen relative to bitcoin when its trading volume exceeds that of bitcoin.
Given these factors, ethereum could continue to underperform bitcoin in the near future.
eth Price Action
ethereum (eth) is currently trading at $2,262 after a significant 23% drop from its local highs. Volatility and uncertainty continue to drive the market as eth tests local demand near its yearly lows of around $2,200.
The cryptocurrency remains well below its 4-hour 200-day moving average (MA) at $2,565, a critical indicator that usually signals market strength. For the bulls to regain control, it is essential for the price to break above this moving average and challenge the local highs of $2,600.
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However, if ethereum fails to hold the support at its yearly low of $2,200, the price will likely enter a deeper correction phase, which could signal the beginning of a bear market. This level is crucial for eth’s short-term recovery as losing it could trigger further selling pressure. The bulls must reclaim these key levels to prevent eth from sliding into an extended bearish territory.
Featured image of Dall-E, chart from TradingView