The price of Ethereum’s native token, Ether (ETH), has been trading against Bitcoin (BTC) for about 15 months, and is the lowest it has been since Ethereum switched to proof-of-stake (PoS).
In previous market cycles, Ethereum has often outperformed Bitcoin during uptrends. But this relationship started to change at the beginning of 2023. Ether and numerous altcoins have had problems. Because the narrative surrounding the use of altcoins in Web3, DeFi, and NFT was pushed in 2022 and 2023.
Strict regulations against the crypto industry, a sharp drop in inflows from retail and institutional investors, an increase in investors seeking shelter in US dollar-pegged stablecoins also weighed on Ethereum sentiment.
In addition to the change in the performance of Ether in the Bitcoin pair, Ethereum was negatively affected by the increasing dominance of Bitcoin. Bitcoin dominance in the market reached 54%. That’s a 30-month high, indicating the top cryptocurrency is rallying just ahead of the halving event scheduled for April 2024.
Bitcoin dominance is a measure of Bitcoin’s market cap relative to the entire crypto market and highlights the strength of assets. Often used by investors as a gauge of sentiment. With the Bitcoin halving fast approaching (April 2024) and investors believing that a Bitcoin Momentum ETF is imminent, the decline in the value of Ether on the Bitcoin pair suggests that investors are more bullish on Bitcoin and possibly They allocate less money to Ether investments.
The ETH/BTC pair fell to 0.050 BTC on October 23 and has remained in a downtrend ever since. A notable event was the pair’s fall below the 200-week EMA near 0.058 BTC, which raises the possibility of further declines in the near term.
The 200-week EMA has historically acted as a reliable support level for ETH/BTC bulls. For example, the pair rallied 75% three months after testing wave support in July 2022. In contrast, it fell more than 25% after losing the same support in October 2020.
These factors will likely continue to influence Ethereum’s price relative to Bitcoin. Multifaceted market dynamics, investor sentiment, and a stable regulatory environment could remain the dominant headwinds against the ETH/BTC pair for the foreseeable future.