ethereum, the second-largest cryptocurrency, has lagged behind bitcoin this year amid slow growth of its exchange-traded funds and competition from other Layer 1 and Layer 2 blockchains.
ethereum (eth) is up less than 20% in 2024, while bitcoin (btc) is up more than 50%.
Technicals point to further weakness in Ether in the coming months. On the weekly chart, the coin formed a double top chart pattern around $4,000. It fell below the neckline of this pattern at $2,824 in July, confirming the bearish breakout.
ethereum has also formed a death cross pattern as the 200-day and 50-day moving averages made a bearish crossover. HMA reduces lag by using weighted moving averages to smooth price data.
The last time ethereum formed a death cross on the weekly chart was in March 2022, and after that the coin fell more than 70%.
Ether has also formed a bearish pennant chart pattern, which is characterized by a long vertical line followed by a symmetrical triangle. Typically, an asset experiences a bearish breakout when the two lines of the triangle converge.
Furthermore, this consolidation is occurring at the 50% Fibonacci retracement level. Therefore, there are increasing chances that the coin will have a strong bearish breakout in the near term, with the next target to watch being $2,111, its lowest point on August 5.
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ethereum's weak fundamentals
In addition to weak technical aspects, ethereum is also battling major fundamental challenges. First of all, Ether ETFs have not seen strong inflows a few months after their launch.
According eth-spot” target=”_blank” rel=”nofollow”>SoSoValueThese funds have had cumulative outflows of over $530 million, primarily due to the Grayscale ethereum Fund. In contrast, bitcoin ETFs have surpassed the $20 billion entry level, pointing to increased demand from institutional investors.
ethereum is also experiencing intense competition in areas it used to dominate, such as DeFi and nfts. Data by DeFi Call shows that Solana has surpassed ethereum in terms of DEX volume in the last seven days. It managed $10.87 billion compared to ethereum's $9.69 billion.
If the trend continues, Solana could overtake ethereum this month. Solana has managed $23.9 billion so far, compared to $24 billion for ethereum.
This performance is largely due to the popularity of Solana (SOL) meme coins, such as Dogwifhat, Bonk, and Popcat, which have become popular among traders. All Solana meme coins have gained over $10 billion in market capitalization.
Additionally, some high-profile ethereum whales, including Vitalik Buterin and the ethereum Foundation, have sold thousands of coins recently.
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Therefore, a combination of weak fundamentals and technicals could send Ether lower in the coming weeks.
