ethereum is holding its own at the time of writing, but continues to underperform bitcoin. Although eth is hovering above $2400, and could even surpass $3000 in the coming years, the rapid strengthening of the world’s most valuable currency, on the other hand, could push the eth/btc ratio to multi-month lows.
eth struggles against bitcoin as eth/btc ratio falls to 40-month low
As of September 20, data from IntoTheBlock x.com/intotheblock/status/1837092357772038351″ target=”_blank”>reveals that eth is trading at the lowest level against bitcoin in over 40 months. This trend clearly shows that the market, even with the participation of institutions, is bullish on btc.
Interestingly, eth continues to underperform despite the approval of ethereum spot ETFs for trading in July 2024. The approval of these complex derivatives allowed institutions to gain exposure to the second most valuable coin within the confines of the law without breaking the bank like they did.
<img class="size-full wp-image-324122" src="https://technicalterrence.com/wp-content/uploads/2024/09/Ethereum-trading-at-40-month-lows-vs-Bitcoin-Is-this-an.jpeg" alt="eth at 40-month lows against btc | Source: @intotheblock via x” srcset=”https://bitcoinist.com/wp-content/uploads/2024/09/GX6oA-XcAAGIpZ.jpeg?w=1120 1120w, https://bitcoinist.com/wp-content/uploads/2024/09/GX6oA-XcAAGIpZ.jpeg?w=640 640w, https://bitcoinist.com/wp-content/uploads/2024/09/GX6oA-XcAAGIpZ.jpeg?w=768 768w, https://bitcoinist.com/wp-content/uploads/2024/09/GX6oA-XcAAGIpZ.jpeg?w=980 980w, https://bitcoinist.com/wp-content/uploads/2024/09/GX6oA-XcAAGIpZ.jpeg?w=750 750w” />
Previously, US institutions looking to buy eth could only do so by purchasing ETHE shares from Grayscale. The problem is that fees were higher when the financial world was unaware of eth’s regulatory status. While nothing has changed, the approval of ethereum spot ETFs, which prevent issuers from staking coins purchased by customers, was considered a victory.
The U.S. Securities and Exchange Commission (SEC) has yet to issue an official statement endorsing eth as a bitcoin-like commodity. However, the Commodity Futures Trading Commission (SEC) has repeatedly stated that eth is a commodity.
With eth declining against btc, IntoTheBlock analysts are convinced that institutional investors are confident in bitcoin’s prospects. In particular, they highlighted bitcoin’s relative stability compared to ethereum, an asset with a higher risk-reward profile.
Will ethereum find support?
Even with this assessment, it should be noted that bitcoin remains a transactional layer, which relies on its first-mover advantage. On the other hand, ethereum is the first smart contract platform and hosts several innovations ranging from DeFi and nfts, and is now pushing towards tokenization.
Previously, Larry Fink, the CEO of BlackRock, said that the tokenization of real-world assets (RWA), most of which is done on ethereum, will grow to reach a trillion in market capitalization. BlackRock has issued BUILDa product that tokenizes US Treasury bonds on ethereum.
<img class="size-full wp-image-324121" src="https://technicalterrence.com/wp-content/uploads/2024/09/Ethereum-trading-at-40-month-lows-vs-Bitcoin-Is-this-an.png" alt="BlackRock Tokenization on ethereum | Source: rwa.xyz” srcset=”https://bitcoinist.com/wp-content/uploads/2024/09/Screenshot-54.png?w=1163 1163w, https://bitcoinist.com/wp-content/uploads/2024/09/Screenshot-54.png?w=640 640w, https://bitcoinist.com/wp-content/uploads/2024/09/Screenshot-54.png?w=768 768w, https://bitcoinist.com/wp-content/uploads/2024/09/Screenshot-54.png?w=980 980w, https://bitcoinist.com/wp-content/uploads/2024/09/Screenshot-54.png?w=750 750w, https://bitcoinist.com/wp-content/uploads/2024/09/Screenshot-54.png?w=1140 1140w” />
It remains to be seen whether eth will recover against btc. Looking at the daily chart, the trend seems to be changing, at least in the short term. The bullish double-bar formation from September 18 and 19 has been confirmed today.
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At the same time, eth appears to be strengthening, approaching the 61.8% Fibonacci retracement level of the 2020-2021 trading range.
