Since August last year, Ethereum has been in a downward trend relative to Bitcoin. This means that during this period, Bitcoin has been considered a more attractive investment
Since August last year, Ethereum has been in a downward trend relative to Bitcoin. This means that during this period, Bitcoin has been considered a more attractive investment. However, we know that market conditions have often been unpredictable in history, and Ethereum may be on the verge of entering the accumulation stage.
Ethereum Price Trends
In the past year, the price of Ethereum has decreased by 22%, with a current trading price of $1600, while Bitcoin has increased by 8%. This is a common trend that occurs during bear markets, as investors tend to reduce risk and preserve capital. Tokens with larger market values are usually more resilient, with Ethereum's market value of $187 billion, although not small, still far below Bitcoin's $525 billion.
During a bull market, investors are more willing to explore assets with higher potential returns, and tokens with smaller market values usually perform better than bitcoin.
Ethereum price compared to Bitcoin
When comparing the value of ETH with BTC, it is evident that Ethereum has been trading in a declining channel since August last year. The characteristic of this form is that the high and low points are relatively low, usually indicating a bearish trend in the market.
Over time, the valuation of ETH relative to BTC
The above figure highlights the other three different stages:
Accumulation stage:During the accumulation phase, prices are relatively stable, indicating that market momentum may be about to change. This is when investors gradually build up their positions, as they believe that prices have bottomed out and are expected to experience a reversal.
Ascending channel:The upward channel is a stage of significant price reversal, usually manifested as a parabolic trajectory, with high and low points gradually rising. This is when investors see investment opportunities and the market starts to move upwards.
Allocation stage:During the allocation stage, prices no longer rise, and investors usually use this opportunity to clear their positions and collect returns.
Currently, Ethereum seems to be still in the accumulation stage, as prices are relatively stable and there have been no obvious signs of reversal. However, past market performance suggests that this situation may change quickly. Investors usually exchange Bitcoin for Ethereum during the accumulation phase because they believe that prices have bottomed out and are about to rebound. This market cycle has already occurred in the past, so it may reappear.
Last cycle
Looking back at the previous cycle, Ethereum experienced a 17 month downward channel relative to Bitcoin. This downward trend continued from September 2019 to February 2020. According to the four-year cycle theory, the market seems to experience a similar stage every four years, which means that in the current cycle, there may be a new round of fundraising.
However, it should be noted that although previous cycles provided useful insights, no two cycles are exactly the same. In the current cycle, the price trend of Ethereum has not fallen significantly as in the previous cycle. This may be due to differences in basic factors and an increase in the maturity of the assets themselves.
Final idea
Although it is not yet clear when Ethereum's prices will bottom out, it is still possible for it to continue to decline relative to Bitcoin. However, if our previous market cycles are used as a reference, it is likely that we will soon enter the fundraising stage. This stage typically provides an excellent buying opportunity for Ethereum.
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