Ethereum and the break of historical support
Recently, Ethereum’s native token, Ether (ETH), has come under significant selling pressure, slipping below key historical support versus Bitcoin (BTC). This event has raised concerns among market analysts, who have suggested that Ethereum is “dying a slow death”. In particular, the ETH/BTC value broke an ascending trendline that has held the market lows since 2016. This trendline was crucial, given that during previous periods it allowed impressive rebounds, such as 300% between December 2020 and December 2021 and an incredible 1,800% between January 2017 and May 2017.
LUGANO FINANCE FORUM: your ticket special discounted a CHF 49. Request it now CLICK HERE
However, in November 2024, Ethereum bulls failed to hold support, resulting in a 15% decline in ETH/BTC, a decline accompanied by an increase in trading volumes. In technical analysis, breaking a support level, especially in the presence of increasing trading activity, is a symptom of intense selling pressure. It is evident that the ETH/BTC pair could experience further declines in the near term.
The comment by Tuur Demeester, founder of the Bitcoin hedge fund Adamant Capital, sums up the situation well: “Ethereum is slowly dying.” ETH/BTC’s performance in 2024 has proven to be particularly poor, largely due to the launch of Bitcoin exchange-traded funds (ETFs) in the United States, which attracted retail and institutional investors to BTC, at the expense of Ethereum.
The current trend clearly demonstrates a vulnerable situation for Ether, which faces not only the lack of historical support, but also the growing competitiveness of other emerging platforms, highlighting a critical phase for the Ethereum ecosystem.
ETH/BTC performance analysis
In recent months, the trend of the ETH/BTC pair has revealed a worrying stagnation, which culminated in the breaking of an ascending trendline that had supported the values since 2016. This settling below the historical support level was accompanied by a significant increase in trading volumes, a combination that traditionally suggests the onset of heavy selling pressure. Analysts warn that this could cause Ether’s value to slide further against Bitcoin.
The performance graph of ETH/BTC over the past six months clearly shows a bearish trend, which became more pronounced starting from November 2024, when the value dropped 15% just below the crucial support. The breaking of this support saw a wave of selling, and any recovery attempt seems to be thwarted by the growing strength of Bitcoin, which, thanks to events such as the fourth halving in April and the launch of Bitcoin ETFs, catalyzed the interest of investors.
Additionally, the inverse cup-and-handle (IC&H) technical pattern is showing signs of completion, driving further selling. This pattern is characterized by a rounded high followed by a consolidation phase, which has now been interrupted by a fall below the support neck. Current projections indicate that reaching the downside target would send ETH/BTC towards a value of 0.017 BTC, a 50% decline from current levels.
Faced with such alarming statistics, it is clear that the market is carefully monitoring the ETH/BTC pair, observing how current behavior may define the future of Ethereum in the competitive cryptocurrency landscape. With other platforms like Solana gaining traction and the growing focus on Bitcoin, Ethereum finds itself in a vulnerable position, where recovering from such decline could prove to be a difficult task.
Factors influencing Ethereum’s decline
Ethereum’s decline is the result of multiple interconnected factors, which together hinder its progress and competitiveness. The recent introduction of Bitcoin exchange-traded funds (ETFs) in the United States has caught the attention of investors, generating a capital outflow from Ethereum. These ETFs represent a new opportunity to invest in Bitcoin, making it more accessible to a wider audience, thus helping to shift interest towards the main cryptocurrency.
Additionally, the Ethereum ecosystem is facing increasing competition from emerging platforms, such as Solana (SOL). Solana has gained considerable popularity, with performance seeing an increase of more than 925% since December 2022. This progressive shift in focus from Ethereum to Solana highlights how the Ethereum network is losing ground in the smart contracts sector, where Solana has demonstrated growing adoption and greater efficiency in transactions.
Another critical aspect is the lack of visibility for Ethereum during significant events such as the US presidential elections, during which candidate Donald Trump hinted at the idea of making Bitcoin a strategic asset for the nation’s reserve, completely neglecting Ethereum. This indifference has potentially damaged the image and interest in Ethereum, further contributing to its decline at a time when competition is gaining momentum.
The combination of these factors has severely impacted the market dominance of Ethereum, which currently stands at its lowest level since 2021. The outlook for ETH is, therefore, critical, as the platform faces not only a decline in investor confidence , but also the need to adapt quickly to maintain its relevance in the competitive cryptocurrency landscape. The need for innovation is more pressing than ever if Ethereum hopes to regain lost ground and reinvigorate its ecosystem.
Future outlook for ETH versus Bitcoin
The current outlook for Ethereum, particularly compared to Bitcoin, is worrying in light of recent market performance. The value of the ETH/BTC pair has shown signs of a strong technical deterioration, highlighted by the break of long-standing support. If the current trend continues, the involvement of traders and investors could further decrease, with negative repercussions for the price of Ether in the coming months.
Technical models suggest that Ethereum could drop to a value of 0.017 BTC, a figure that would represent a 50% drop from current levels. This projection is based on a cup-and-handle reversal that has signaled a loss of momentum lately. Completion of this pattern would result in a continuation of selling pressure, thus resulting in increasingly bearish trading patterns.
The possibility of a recovery appears to be highly dependent on ETH’s ability to rise above current support levels. A significant rebound, bringing the pair back towards the 0.043 BTC mark, could call into question current bearish forecasts. However, to achieve this goal, positive news or fundamental developments that can renew investor interest in Ethereum will be needed.
Furthermore, the market’s focus on Bitcoin, accentuated by the recent launch of ETFs and the fourth halving, is further marginalizing Ethereum. Demand, in fact, seems to increasingly focus on Bitcoin, which benefits from an effective narrative that positions it as a safe and strategic asset in the long term.
It remains to be seen how Ethereum will react in this competitive climate. Upcoming market events, the adoption of new features on the platform and the community’s response could significantly influence the future of ETH in this context of increasing competition. Ethereum’s ability to stand out in an environment of intense rivalry will be critical to its recovery and continued seduction of investors. Strategic choices and innovations made in the near term will be crucial in determining not only the fate of ETH, but also in ensuring its lasting relevance in the cryptocurrency landscape.
Conclusions and final considerations
Future outlook for ETH versus Bitcoin
The outlook for Ethereum, particularly in relation to Bitcoin, is shaping up to be worrying. In recent months, the trend of the ETH/BTC pair has shown signs of significant technical deterioration, culminating in the break of historical support. This event has raised questions not only about the future of Ether, but also about its potential attraction for traders and investors, who are increasingly skeptical about the success of the network compared to the competition represented by Bitcoin.
Current forecasts suggest a possibility of a further drop in Ethereum to 0.017 BTC, a value that would mark a 50% decrease from current levels. This scenario is based on the technical analysis of a cup-and-handle inverse pattern, which has shown signs of losing momentum. If selling pressure persists, bearish trading patterns are expected to increase, resulting in further capital moving away from Ethereum.
The prospect of a significant recovery will depend on ETH’s ability to stabilize and possibly break above current support levels. A rebound towards a value of 0.043 BTC could reconsider negative predictions and stimulate renewed interest among investors. However, achieving this requires positive news and significant developments that can reignite enthusiasm around the platform.
On the other hand, the growing attention towards Bitcoin, accentuated by the recent launch of ETFs on the market and the fourth halving, has made Ethereum even more marginal. Bitcoin is establishing itself as a strategic asset, making it difficult for Ethereum to maintain its position. The speed with which the market reacts to these dynamics will impact Ethereum’s eventual recovery. In this highly competitive environment, Ethereum’s ability to innovate and re-attract investor interest will be critical to its future.
It remains to be seen how Ethereum will face this challenge: the initiatives that will be undertaken in the coming months, as well as the adoption of new features on the platform, will have a decisive impact on the future of ETH. Competition in the cryptocurrency market is fierce and only a positive evolution will guarantee Ethereum a relevant role in the long term.
