ETH prices continue to decline relative to Bitcoin. Cointelgraph carefully studied the factors behind the weakness of the ETH/BTC currency pair
ETH prices continue to decline relative to Bitcoin. Cointelgraph carefully studied the factors behind the weakness of the ETH/BTC currency pair.
The price of Ethereum's native token Ethereum (ETH) relative to Bitcoin (BTC) is currently near a 15 month low, which is also the lowest level since Ethereum switched to Proof of Rights (PoS).
Cointelgraph carefully studied some of the reasons for the sustained decline of the ETH/BTC currency pair.
The historical price trend of Ethereum has changed
In previous market cycles, Ethereum typically outperformed BTC in bull market trends, but this relationship began to change in early 2023. With the narratives on the use of counterfeit coins in Web3, DeFi, and NFT facing pressure in 2022 and 2023, Ethereum and many counterfeit coins are in trouble..
Strict regulation of the encryption industry, severe weakening of capital inflows from retail and institutional investors, and an increase in investors seeking refuge in stable currencies linked to the US dollar have also affected Ethereum's sentiment.
Bitcoin's Dominance Rising
In addition to changes in ETH's performance in BTC currency pairs, ETH has also been negatively impacted by the steady rise in Bitcoin dominance. According to Cointelgraph,
Bitcoin's market dominance has reached 54%, the highest level in the past 30 months, indicating that top tier cryptocurrencies are strengthening ahead of the halving event scheduled for April 2024
The dominant position of Bitcoin is a measure of its market value relative to the entire cryptocurrency market, highlighting the strength of the asset and often used by investors as an emotional indicator. With the approaching halving of Bitcoin (April 2024) and investors believing that the spot BTCETF is about to be launched, the decline in the value of Ethereum in BTC currency pairs indicates that investors are more optimistic about BTC and may reduce the allocation of funds for Ethereum investments.
Related: With the approaching halving of BTC, Bitcoin's dominant position has reached 54% - the highest level in 2.5 years
Ethereum prices have fallen below the key support level of Bitcoin
The ETH/BTC currency fell to 0.050BTC on October 23 and has been in a downward trend since then. It is worth noting that the currency pair has fallen below the 200 week moving average of the index near 0.058BTC, which increases the possibility of further decline in the short term.
According to YashuGola, a contributor to Cointegraph,
The 200 week moving average has always been a reliable support level for ETH/BTC bulls. For example, the currency pair rebounded 75% in the three months after testing wave support in July 2022. On the contrary, after losing the same support in October 2020, the currency pair fell by more than 25%.
These factors may continue to affect the price of Ethereum relative to Bitcoin. In the foreseeable future, various market dynamics, investor sentiment, and strict regulatory environment may still be the main obstacles to the ETH/BTC currency pair.
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