Ethereum (ETH) Struggles Against Bitcoin, But Analysts See Potential Recovery
Arslan Butt•Thursday, September 12, 2024•1 min read
Ethereum (ETH), the second-largest cryptocurrency by market capitalization, is currently trading at $2,363, marking a 40-month low against Bitcoin (BTC). While Bitcoin has surged approximately 36% in 2024, ETH has barely moved, trading just 0.02% above its January 1 opening price.
Factors Behind Ethereum’s Underperformance
ETH/BTC Ratio Decline
The ETH/BTC ratio has dropped by about 22% over the last three months, reaching a multi-year low of 0.04057 on September 11. This decline indicates a lack of demand for Ether, with investors seemingly preferring Bitcoin.
Impact of ETFs
While both cryptocurrencies have seen the introduction of spot ETFs, Bitcoin ETFs have been notably more successful. Onchain data provider Glassnode reports that ETFs have a lower relative influence on Ether’s price (1% of spot volume) compared to Bitcoin (8% of spot volume).
Rising Bitcoin Dominance
Bitcoin’s market dominance reached a 40-month high of 58% on August 5, 2024, suggesting a strengthening position against altcoins, including Ethereum.
Sluggish Onchain Metrics
Ethereum’s network activity shows signs of decline:
The 30-day average of daily active addresses (430,250) has decreased by 7.7% from 90 days ago.
Ethereum DApps have seen a 19% decline in unique active wallets over the past 30 days, while competing blockchains like Solana and Tron have experienced significant growth.
Potential for Recovery
Despite the current underperformance, some analysts remain optimistic about Ethereum’s future:
Crypto strategist Kaleo predicts a rise to $4,400 for ETH, suggesting that a local bottom has formed.
Technical analysis indicates that Ethereum is attempting a recovery above the $2,320 zone, with key resistance levels at $2,400 and $2,500.
The hourly chart shows a break above a short-term declining channel, potentially signaling an upward trend.
ETH/USD Technical Analysis
However, Ethereum must clear the $2,400 resistance to gain bullish momentum in the near term. Failure to do so could lead to another decline, with support levels at $2,330 and $2,250.
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.