The recent performance of Ethereum’s native token, Ether (ETH), has been less than stellar. It is currently trading at a 15-month low against Bitcoin (BTC), reaching its lowest point since Ethereum switched to proof-of-stake (PoS). This raises concerns about whether ETH will continue to weaken throughout the remainder of 2023. To gain a clearer understanding of the situation, let’s delve deeper into the charts.
The ETH/BTC pair dropped to a low of 0.056 BTC earlier this week, breaking below its 200-week exponential moving average (EMA), which is represented by the blue wave and is a crucial support level. Historically, this moving average has proven to be reliable for ETH/BTC bulls. When the pair tested the wave support in July 2022, it rebounded by 75% within three months. Conversely, when it lost this support in October 2020, it experienced a sharp decline of over 25%.
With the recent breach of the 200-week EMA as support, the pair is now exposed to potential selloff risks in 2023. If this downward trend continues, the next support level to watch is around the 0.5 Fibonacci line near 0.051 BTC, marking a decline of approximately 9.5% from the current price levels. However, if ETH manages to reclaim the 200-week EMA as support, there is a possibility of a rebound towards its 50-week EMA, represented by the red wave near 0.065 BTC.
The persistent weakness of Ethereum compared to Bitcoin is also reflected in institutional capital flow data. While Bitcoin-specific investment funds attracted $246 million year-to-date (YTD) as of October 6, Ethereum funds experienced capital outflows worth $104 million during the same period. This discrepancy can be attributed to the growing buzz surrounding the potential approval of a spot Bitcoin exchange-traded product (ETF) in the United States. Analysts predict that a spot Bitcoin ETF launch could attract a staggering $600 billion.
Furthermore, another factor contributing to Bitcoin’s strength in comparison to the altcoin market is its fourth halving, set to occur on April 24, 2024. This event is seen as a tailwind for Bitcoin, further diminishing Ethereum’s appeal in the eyes of investors.
As Ethereum continues to face challenges and struggles to regain its footing against Bitcoin, the future remains uncertain. The recent decline in price and the breach of key support levels indicate a bearish trend for ETH/BTC. However, the cryptocurrency market is known for its volatility, and unexpected shifts can occur.
Investors and traders should closely monitor the price movements of Ethereum and Bitcoin, paying attention to key technical levels and market sentiment. The interplay between these two leading cryptocurrencies will likely shape the trajectory of Ethereum’s performance in the coming months of 2023.
Ethereum’s price decline against Bitcoin raises concerns about its performance for the remainder of 2023. The breach of key support levels and the discrepancy in institutional capital flow paint a bleak picture for Ethereum. However, the cryptocurrency market is known for its unpredictability, and it remains to be seen whether Ethereum can stage a comeback in the face of Bitcoin’s dominance.