The price of Ethereum (ETH) has fallen further compared to Bitcoin. Here we investigates the causes of the falling ETH/BTC exchange rate.
Since Ethereum made the transition to proof-of-stake (PoS), the value of its native currency, Ether (ETH), has dropped to levels not seen in more than 15 months
How trend of Ether’s past pricing has shifted
Ethereum has previously outperformed Bitcoin (BTC) during positive market trends in past market cycles, but this pattern reversed at the start of 2023. Ether and several altcoins declined as the narrative surrounding altcoins usage inside Web3, DeFi and NFTs came under attacks in 2022 and 2023.
Etheruem’s state was impacted by factors like strict laws against the crypto sector, reduced inflows from retail and institutional investors, and an increase in investors seeking refuge in US dollar-pegged stablecoins.
Bitcoin Dominance
Ether’s value dropped as Bitcoin’s popularity grew, and the cryptocurrency’s performance in its BTC pairing also dipped. Cointelegraph has stated that
With its market share at 54%, Bitcoin is stronger than it has been in the previous 30 months, just in time for the next halving event in April 2024.
cointelegraph
Bitcoin’s market capitalization compared to the whole crypto market is a common indicator of the asset’s strength and popularity among investors. The reduction in Ether’s value in its BTC pair shows that investors are feeling more positive about BTC and likely devoting less money to Ether investments as the Bitcoin halving approaches (April 2024) and investors believe that a spot BTC ETF is forthcoming.
Why Ethereum’s value drops below key resistance vs Bitcoin
Since October 23 when it hit a low of 0.050 BTC, the Ethereum/Bitcoin exchange rate has been steadily declining. Notably, the pair has dropped below its 200-week exponential moving average at 0.058 BTC, suggesting additional declines may be possible in the near future.
ETH/BTC bulls have found consistent support around the 200-week EMA in the past. For instance, after testing the wave support in July 2022, the pair bounced back by 75% three months later in November 2022. However, after losing that same support in October of 2020, it fell by almost 25%.
These variables are expected to keep having an effect on the value of Ethereum in comparison to Bitcoin. The ETH/BTC pair may continue to experience strong headwinds from a variety of sources, including the current market climate, investor sentiment, and the regulatory context.
