The value of Ethereum’s native token, Ether (ETH), is currently trading at around a 15-month low compared to Bitcoin (BTC), marking the lowest point since Ethereum transitioned to proof-of-stake (PoS).
Cointelegraph examines various factors contributing to the persistent decline of the ETH/BTC pair.
Ether’s historical price dynamics have shifted
In earlier market cycles, Ethereum typically outperformed BTC during bullish trends, but this dynamic began to alter at the start of 2023. Ether, along with many altcoins, faced challenges as the narrative surrounding altcoin usage in Web3, DeFi, and NFTs came under scrutiny in 2022 and 2023.
Strict regulations targeting the crypto sector, significantly reduced inflows from retail and institutional investors, and an increase in investors seeking refuge in US-dollar-pegged stablecoins have also influenced sentiment toward Ethereum.
Bitcoin dominance increases
Alongside a shift in Ether’s performance against BTC, ETH has been adversely affected by the consistent rise in Bitcoin dominance. As reported by Cointelegraph,
“Bitcoin’s market dominance has reached 54%, its highest in the last 30 months, indicating that the leading cryptocurrency is gaining strength just ahead of the halving event scheduled for April 2024.”
Bitcoin dominance measures BTC’s market capitalization relative to the total cryptocurrency market, highlighting the asset’s robustness and is often utilized by investors as a sentiment indicator. With the Bitcoin halving approaching (April 2024) and the belief among investors that a spot BTC ETF is forthcoming, the decline in Ether’s value in its BTC pair indicates that investors might be more optimistic about BTC and potentially allocating fewer resources to Ether investments.
Related: Bitcoin dominance reaches 54% — Highest in 2.5 years as BTC halving nears
Ethereum price falls below crucial support against Bitcoin
The ETH/BTC pair declined to 0.050 BTC on October 23 and has been on a downward trajectory since then. A significant event was the pair’s drop below its 200-week exponential moving average near 0.058 BTC, which raises the likelihood of further declines in the short term.
According to Cointelegraph contributor Yashu Gola,
“The 200-week EMA has historically acted as a dependable support level for ETH/BTC bulls. For example, the pair rebounded by 75% three months after testing the wave support in July 2022. On the other hand, it fell over 25% after breaking the same support in October 2020.”
These elements are likely to continue affecting Ethereum’s price in relation to Bitcoin. The complex market dynamics, investor sentiment, and stringent regulatory landscape could persist as significant challenges for the ETH/BTC pair in the near future.
This article does not provide investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own research before making a choice.
