ETH/BTC: Analysis of Ethereum’s Decline Against Bitcoin

The Ethereum price is currently at its lowest against Bitcoin since January 2020, down by 80% since December 2020. The downward trend is marked by significant bearish technical indicators, including a death cross formation and increasing momentum. Investors prefer Bitcoin as a store of value, and Ethereum is facing stiff competition from layer-2 networks and emerging layer-1 blockchains. Analyst predictions for Ethereum have been downgraded significantly.

The ETH/BTC trading pair experiences a substantial decline, dropping to 0.0186, the lowest since January 2020 and representing an 80% fall from its December 2020 peak. This downward trend has been evident over the years, with the pair plummeting from 0.088 in 2021. The downward momentum intensified after the formation of a death cross pattern in April of the previous year, where the 50-week moving average crossed below the 200-week moving average.

Technical indicators, such as the Relative Strength Index (RSI) and oscillators, indicate ongoing bearish momentum. Additionally, the Average Directional Index (ADX) has surged to 45, signifying that the downward trend is accelerating. The formation of an inverse cup and handle pattern further reinforces the bearish outlook, indicating continued price deterioration. A critical support threshold is identified at 0.01635, with a breach potentially leading to a further decline towards the all-time low of 0.0010.

The downturn in Ethereum’s price compared to Bitcoin can be attributed to investor confidence in Bitcoin as a superior store of value. Notably, Bitcoin exchange-traded funds (ETFs) have attracted approximately $2 billion, with Wall Street investments exceeding $35 billion, while Ethereum struggles to maintain its market position.

Competition has intensified within the layer-1 blockchain sector, with emerging networks such as Berachain, Sui, and Aptos encroaching on Ethereum’s market share. Additionally, Ethereum faces competition from layer-2 solutions like Base and Arbitrum, which improve transaction efficiency and cost-effectiveness. These layer-2 networks have collectively secured over $22 billion in bridged assets, diverting funding that would typically have supported Ethereum’s performance.

Analysts have also expressed a more pessimistic outlook for Ethereum, with institutions like Standard Chartered adjusting their price target from $10,000 to $4,000, reflecting growing scepticism about Ethereum’s prospects in an increasingly competitive landscape.