The price of ethereum‘s native token Ether (eth) is trading around a 15-month low against bitcoin (btc), and the lowest since ethereum switched to proof-of-stake (PoS).
Cointelegraph takes a closer look at some of the reasons for the continued decline of the eth/btc pair.
Historical Ether Price Action Has Changed
In previous market cycles, ethereum often outperformed btc during bull market trends, but this relationship began to change in early 2023. Ether and numerous altcoins struggled as the narrative around altcoin use within Web3, DeFi and nft came under pressure in 2022 and 2023. .
Strict regulations against the crypto industry, severely reduced inflows from retail and institutional investors, and an increase in the number of investors seeking refuge in US dollar-pegged stablecoins also affected sentiment towards Etheruem.
bitcoin dominance increases
In addition to a change in Ether’s performance on its btc pair, eth was negatively affected by bitcoin‘s continued rise in dominance. As Cointelegraph reported,
“bitcoin market dominance has reached 54%, its highest level in the last 30 months, indicating that the leading cryptocurrency is strengthening just ahead of the halving event scheduled for April 2024.”
bitcoin dominance is a measure of btc‘s market capitalization relative to the overall crypto market and highlights the asset’s strength and, if often used by investors, as a sentiment indicator. With the bitcoin halving rapidly approaching (April 2024) and investors believing that a btc spot ETF is imminent, the drop in the value of Ether on its btc pair suggests that investors are feeling more optimistic about btc and possibly allocating less money to Ether investments.
Related: bitcoin Dominance Hits 54% – Highest in 2.5 Years as btc Halving Approaches
ethereum Price Falls Below Critical Support Against bitcoin
The eth/btc pair fell to 0.050 btc on October 23 and has remained in a downtrend since then. One notable development was the pair’s decline below its 200-week exponential moving average near 0.058 btc, raising the possibility of a further decline in the near term.
According to Cointegraph contributor Yashu Gola,
“The 200-week EMA has historically served as a reliable support level for eth/btc bulls. For example, the pair recovered 75% three months after testing wave support in July 2022. In contrast, it fell more than 25% after losing the same support in October 2020.”
These factors are likely to continue to impact the price of ethereum relative to bitcoin. Multifaceted market dynamics, investor sentiment, and strict regulatory environment could remain the dominant headwinds against the eth/btc pair for the foreseeable future.
This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should conduct their own research when making a decision.
