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As bitcoin (btc) hit a new all-time high (ATH) of $98,310 today, the eth/btc trading pair fell to multi-year lows, raising questions about the relative strength of ethereum (eth), the second-largest digital asset. . .
What is causing ethereum's poor performance against bitcoin?
bitcoin's new ATH today puts it within $2,000 of the coveted $100,000 mark. However, btc's sustained dominance has resulted in poor performance of altcoins, particularly ethereum, throughout the year.
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The weekly chart below reveals that the eth/btc trading pair has fallen to a multi-year low of 0.0331, a level last seen in March 2021. Since December 2021, the pair has failed to form a new higher high, reflecting a drop of more than 60%.
The pair's losses have accelerated since July 2024, coinciding with the rise in the price of bitcoin, driven by growing optimism over the prospects of pro-crypto Republican candidate Donald Trump in the US presidential election.
He success of bitcoin exchange-traded funds (ETFs) has also contributed to institutional preference for btc over other cryptocurrencies. Currently, btc ETFs have over $100 billion in total net assets.
While ethereum ETFs have also received regulatory approval, they have not matched the success of their bitcoin counterparts. For example, US-based ethereum spot ETFs have so far accumulated only $8.96 billion in total net assets.
Additional factors such as the bitcoin halving in April 2024 (reducing miner rewards from 6.25 btc to 3.125 btc) have further reinforced the btc supply shortage narrative. By contrast, ethereum's rising issuance rate has led some experts to question its status as “ultra-sonic money.”
Additional factors like bitcoin reduce by half in April, which reduced miner rewards from 6,250 btc to 3,125 btc, further reinforced the digital asset supply shortage narrative. On the contrary, ethereum growing The issuance rate has led some experts to question its status as “ultrasonic money.”
When will ethereum recover losses relative to btc?
With the eth/btc trading pair hitting new lows, ethereum traders are eager to know when eth could recoup its losses. Several analysts have shared their views on x.
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crypto analyst @CryptoGemRnld recently <a target="_blank" href="https://x.com/CryptoGemRnld/status/1859322956863897624″ target=”_blank” rel=”nofollow”>identified two strong support zones: a trend line support and a demand box zone. According to the analyst, since 2017, the eth/btc pair has historically recovered from these levels, often leading to altcoin seasons.
Similarly, experienced trader Peter Brandt has <a target="_blank" href="https://x.com/PeterLBrandt/status/1859430583476027556″ target=”_blank” rel=”nofollow”>suggested that the eth/btc ratio may be approaching its bottom. Brandt's analysis predicts a possible reversal in December, with the trading pair beginning an upward trajectory.
In support of this perspective, recent data indicates that eth may be undervalued at current prices. The limited entry of eth into exchanges, coupled with the lack of significant profit taking, suggests that eth bulls are hoping to take more profits.
Additionally, eth spot ETFs have been recording significant entries, attracting more than $515 million between November 9 and 15. At press time, eth is trading at $3,333, up 7.4% in the last 24 hours.
Featured image from Unsplash, charts from Tradingview.com
