Continuous Decline of Ethereum Against Bitcoin: Unpacking the Factors and Implications
Summary:
Ethereum's native cryptocurrency, Ether, is trading at a 15-month low against Bitcoin, since it transitioned to proof-of-stake. Factors like altcoins' underperformance in Web3, DeFi and NFT sectors, tightened crypto regulations, a decrease in cryptocurrency investments, and a surge in Bitcoin dominance have contributed to the continuous decline of the ETH/BTC pair. This is accompanied by Ethereum's drop below its 200-week exponential moving average, indicating a potential for further decline. It is suggested that investor sentiment, market dynamics, and the regulatory climate may continue to hinder performance of the ETH/BTC pair.
Ether, the native cryptocurrency of Ethereum, is seeing a concerning slump in its value against Bitcoin (BTC). This brings the value of Ether (ETH) to its lowest point in 15 months since Ethereum shifted to its proof-of-stake model. A more detailed analysis will shed light on why the ETH/BTC pair has been constantly declining. Historically, Ethereum has generally had an upper hand on Bitcoin during buoyant market conditions. However, this trend started to falter at the beginning of 2023. Ethereum and many alternative cryptocurrencies had a tough time as the potential uses of these altcoins in realm of Web3, DeFi, and NFTs came under strain in 2022 and 2023. Tighter regulatory measures on cryptocurrency, a noticeable dip in investment from retail and institutional bodies, and a rise in investors seeking safety in US-dollar-tethered stablecoins have also affected Ethereum's standing. Alongside this change, Ethereum's performance against Bitcoin has also been negatively influenced by a steady increase in Bitcoin dominance. It has been reported by Cointelegraph that Bitcoin's dominance in the market has surged to 54%, the highest in the last two and a half years. This signals that Bitcoin is gaining strength just as we approach the halving of Bitcoin scheduled for April 2024. The dominance of Bitcoin signifies Bitcoin's market capitalization compared to the overall cryptocurrency market. It is an important statistic for investors to assess the strength of an asset. The anticipation of Bitcoin halving in April 2024, coupled with the expectation of a Bitcoin-specific ETF, suggests that investors may be leaning more towards Bitcoin, which in turn indicates a decreased investment in Ethereum. The ETH/BTC pair continues on a downward trend as it fell to 0.050 BTC on October 23. The pair's drop below 200-week exponential moving average at about 0.058 BTC gives an indication of potential further decline in the near future. This average has typically been a reliable indicator of support for the ETH/BTC pair. An example would be the 75% rebound months after the support wave was put to the test in July 2022. It is likely that Ethereum's price will keep getting affected by its relative value to Bitcoin due to factors such as market dynamics, regulatory environment, and shifts in investor sentiment. Predictably, these factors will remain major obstacles for the ETH/BTC pair in the foreseeable future. Remember, this is not investment advice or a recommendation. Investing and trading always involve risks, so it's essential to do your own research before deciding.
Published At
11/1/2023 7:00:00 PM
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