The price of Ethereum’s native token Ethereum (ETH) relative to Bitcoin (BTC) is currently near a 15-month low and the lowest level 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.
Ethereum’s historical price action has changed
In previous market cycles, Ethereum typically outperformed BTC during bullish trends, but this relationship began to change in early 2023. As the narrative around altcoin usage in Web3, DeFi, and NFTs comes under pressure in 2022 and 2023, Ethereum and numerous altcoins are in trouble. .
Strict regulations targeting the crypto industry, severely weakened inflows from retail and institutional investors, and an increase in investors seeking shelter in USD-pegged stablecoins have also impacted sentiment on Ethereum.
Bitcoin dominance rises
In addition to changes in ETH’s performance within the BTC pair, ETH has also been negatively affected by Bitcoin’s steady rise in dominance. According to Cointelegraph,
“Bitcoin’s market dominance has reached 54%, the highest level in the past 30 months, indicating that the top cryptocurrency is strengthening ahead of the halving event scheduled for April 2024.”
Bitcoin dominance, a measure of Bitcoin’s market capitalization relative to the overall crypto market, highlights the asset’s strength and is often used as a sentiment indicator by investors. As the Bitcoin halving approaches (April 2024) and investors believe that a spot BTC ETF is imminent, the decline in the value of Ethereum in the BTC pair suggests that investors are becoming more bullish on BTC and may invest less in Ethereum Fund allocation.
related: Bitcoin dominance reaches 54% – highest level in 2.5 years as BTC halving approaches
Ethereum price falls below key Bitcoin support level
The ETH/BTC currency pair dropped to 0.050 BTC on October 23 and has been in a downward trend since then. Notably, the pair fell below the 200-week exponential moving average near 0.058 BTC, which increases the likelihood of further losses in the near term.
According to Cointegraph contributor Yashu Gola,
“The 200-week moving average has historically been a reliable support level for ETH/BTC bulls. For example, the pair rebounded 75% in three months after testing wave support in July 2022. Conversely, after losing the same support in October 2020, the pair The pair fell more than 25%.
These factors may continue to impact the price of Ethereum relative to Bitcoin. Multifaceted market dynamics, investor sentiment, and a strict regulatory environment are likely to remain major headwinds for the ETH/BTC pair for the foreseeable future.
This article does not contain investment advice or recommendations. Every investment and trading activity involves risks, and readers should do their own research when making decisions.
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