Analysis of Ethereum’s Declining Value Against Bitcoin

The ETH/BTC pair has dropped to 0.0186, marking an 80% decline since December 2020, reflecting a persistent bearish trend. A death cross pattern, declining RSI, and rising ADX suggest ongoing downward momentum. Increased competition from other blockchains and criticism from analysts contribute to falling Ethereum prices against Bitcoin.

The ETH/BTC trading pair continues to face significant downward pressure, reaching an alarming low of 0.0186. This figure marks the lowest point since January 2020 and represents an 80% decline from its peak of 0.088 in December 2020. The primary driving factor behind this decline appears to be the persistent bearish trend observed over the past few years, especially following the formation of a death cross in April 2022 between the 200-week and 50-week moving averages.

Technical analysis indicates that the momentum behind this sell-off remains strong. The Relative Strength Index (RSI) and other oscillators display a consistent downward trajectory, indicating intensified selling behaviour. Moreover, the Average Directional Index (ADX) has risen to 45, which signals that the downward trend is gaining momentum as readings above 25 typically suggest a strengthening trend.

The formation of an inverse cup and handle pattern suggests an ongoing bearish outlook for Ethereum against Bitcoin. This technical pattern includes a horizontal line at the bottom and a rounded top, which signifies further consolidation before declining. A breach below the critical support level of 0.01635 would further confirm this negative trend, with the next target being the historical low of 0.0010.

The decline in Ethereum’s price relative to Bitcoin is attributed to several factors. Many investors perceive Bitcoin as a more reliable store of value, particularly evidenced by substantial inflows of around $2 billion into BTC-focused ETFs, contrasting sharply with the over $35 billion attracted by Bitcoin from Wall Street investors.

In addition to this, Ethereum faces mounting competition within the layer-1 blockchain sector. Emerging networks such as Berachain, Sui, Aptos, and Sonic are gaining traction, which poses a challenge to Ethereum’s traditional dominance. Moreover, layer-2 networks like Base and Arbitrum are optimising performance for Ethereum, with these systems processing transactions more swiftly and cost-effectively.

Specifically, Base and Arbitrum have successfully attracted over $11.6 billion and $10.6 billion in bridged assets, respectively, which likely detracts investment away from Ethereum’s ecosystem. Furthermore, analysts have responded to these developments with scepticism, illustrated by Standard Chartered’s recent downgrade of Ethereum’s market forecast from $10,000 to $4,000.