Ethereum (ETH) is currently facing a significant challenge as it experiences selling pressure and fear in the market, leading to a 23% decline in its price, dropping to yearly lows at $2,200. Investors are particularly concerned about the ongoing underperformance of ETH compared to Bitcoin, a trend that has been persistent since September 2022. This drop of 44% against Bitcoin has left many questioning the reasons behind Ethereum’s struggle.
A recent report from CryptoQuant sheds light on several factors that may be influencing ETH’s performance. Declining on-chain activity, diminishing institutional interest, and the lackluster performance of Ethereum ETFs compared to Bitcoin are all contributing to Ethereum’s struggles. The ETH/BTC pair is now at 0.0425, its lowest level since April 2021.
Ethereum’s underperformance seems to be linked to weaker network activity dynamics compared to Bitcoin. For example, Ethereum’s total transaction fees have been decreasing, mainly due to lower fees post the Dencun upgrade. The transaction count has also seen a significant drop from 27 in June 2021 to 11, one of the lowest levels since July 2020. Additionally, the total supply of ETH has been steadily increasing since the Dencun upgrade, now at 120.323 million ETH, the highest level since May 2023.
Traders and investors have shown a clear preference for Bitcoin over Ethereum, with the relative spot trading volume of ETH to Bitcoin dropping from 1.6 to 0.76 in the past week. Historically, Ethereum’s price has risen in comparison to Bitcoin when its trading volume outperforms Bitcoin’s. However, given the current market dynamics, Ethereum may continue to struggle against Bitcoin in the near future.
Ethereum (ETH) is currently trading at $2,262 after a significant drop of 23% from its recent highs. Volatility and uncertainty are driving the market as ETH tests local demand near its yearly lows of $2,200. The cryptocurrency remains below its 4-hour 200 moving average (MA) at $2,565, indicating a dip in market strength.
For bulls to regain control, ETH needs to break above this moving average and reach local highs at $2,600. However, failure to hold support at $2,200 could lead to a deeper correction phase, marking the beginning of a bear market. Retaking these key levels is crucial for ETH’s short-term recovery and preventing further selling pressure.
Ethereum (ETH) is facing significant headwinds in the market, with various factors impacting its performance against Bitcoin. With on-chain activity declining, institutional interest wavering, and trading volume favoring Bitcoin, the road ahead for Ethereum remains uncertain. Bulls need to step in decisively to prevent ETH from sliding further into bearish territory.
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