Journalist
Posted:
- The ETH/BTC chart is in a long-term downtrend.
- In comparison, Bitcoin’s strength was evident and will likely continue.
Bitcoin since October [BTC] is up an impressive 57.5% at the time of writing. During the same period Ethereum [ETH] the gain was 48.34%. The difference isn’t much, but ETH has been underperforming for almost a year now.
This means that during times when Bitcoin is higher, Ethereum will not achieve equivalent or higher gains. During periods of downturn, Ethereum prices suffer more than Bitcoin.
Is this trend likely to reverse?
Technical analysis of the ETH/BTC chart underlined the gloom
Source: ETH/BTC on TradingView
The ETH/BTC chart on the one-day time frame highlighted the downtrend that has been present since early June. The conclusion was that ETH simply could not keep up in terms of performance. And the story doesn’t end there.
The resistance zone marked in the 0.055 region represented a key resistance zone that ETH bulls will have to break through to reverse their fortunes. However, the market structure was bearish.
The Fibonacci retracement level of 61.8% was tested on November 10. A rapid turnaround followed.
A move below 0.051 would be a signal that ETH/BTC is heading much further down. If that happens, traders and investors could exit the ETH market if a longer-term bearish market structure break occurs.
Assuming Bitcoin climbs above the key resistance at $45k, but ETH/BTC falls, participants could look to shift their money into BTC to push the trend higher.
Assessing the Selling Pressure on ETH and BTC
A sign that selling pressure is about to arise on an asset is if we observe large inflows on the stock exchanges. If that happens, the foreign exchange reserve for the asset would skyrocket. This has not yet happened with either Bitcoin or Ethereum.
The BTC exchange reserve has been consistently trending lower since June. Despite the downward trend, there was a noticeable spike from December 5 to December 12. Right after this peak, Bitcoin prices plummeted from $43.7k to $41.2k.
Source: CryptoQuant
Ethereum reserves saw less volatility. This was also in a downward trend and has been so since February 2023.
Ethereum saw a small spike in reserves between December 11 and 13, but the increase came during and after the price drop. This suggested that some holders were panicking over what they saw as a trend shift as BTC inflows preceded the decline.
Source: CryptoQuant
The inference was that Bitcoin reserves and flow could be a more accurate measure of next price direction than Ethereum.
However, this was only based on the recent peak and is not a practical finding with a large sample size. Still, it is something to be aware of.
What is the sentiment of BTC and ETH?
A look at the social volume for both crypto assets revealed that, as expected, Bitcoin’s social volume was much higher than Ethereum’s. Still, their trends were quite similar. This could be because their price performance is closely linked.
Source: Santiment
When Bitcoin rises, so does Ethereum, but not by as much.
The MVRV ratio for Bitcoin and Ethereum also showed similar trends, but their magnitudes were vastly different. At the time of writing, BTC was at 41.17%, while ETH was at 26.45%.
Read Bitcoin’s [BTC] Price forecast 2023-24
Both values were at their highest levels in six months, despite the recent price decline. The conclusion was that both assets were overvalued, with Bitcoin holders making a bigger profit and therefore happier.
It remains to be seen whether these holders will choose to realize their gains en masse and cause a major sell-off.