The cryptocurrency industry was under a lot of pressure last week, with Bitcoin and Ethereum leading the crash and multiple cryptocurrencies reached new multi-month lows. The The crash was more pronounced in BitcoinHowever, and the imbalance in selling pressure quietly changing the relationship between the two assets.
The interesting imbalance is reflected in Ethereum’s performance against Bitcoin. A technical analysis of the ETH/BTC ratio shared on social media platform
Long term triangle is about to break
According to the technical analysis of the ETH/BTC 2-week chart, Ethereum is an important point is approaching against Bitcoin after years of consolidation under a declining trendline. This long-running pattern stems from a major spike in relative valuation in July 2017, when 1 ETH was worth 0.154 BTC in Bitcoin terms, and has since formed a series of lower highs to form a descending resistance trendline. The lower limit of this pattern is a proven support zone around 0.02 that has been drawn repeatedly buy interest for Ethereum in relation to Bitcoin.
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At the time of writing, the ETH/BTC ratio is trading around 0.030. However, the most recent two-week candlestick has turned green, and this development is important to the bullish outlook of Ethereum’s performance against Bitcoin.
The bullish projection is based on a full display of the green candlestick with a push toward the descending triangle resistance trendline. If the pair can convincingly break above the upper trend line of the descending triangle with continued momentum, this would allow Ethereum to enter a phase of sustained outperformance against Bitcoin.
How high can ETH/BTC go if a breakout occurs?
Crypto analyst Jonathan Carter outlined a range of potential upside targets for the ETH/BTC pair break free from the downward trend. The first target is around 0.040 BTC, which would mark a marked departure from the compressed range of recent months. If momentum continues, higher potential targets include 0.060, 0.085, 0.105, 0.124 and all the way to the 2017 peak of 0.154.
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Translating these ratio-based targets into absolute price levels is less straightforward, as the projections are based on Ethereum’s performance against Bitcoin and not on isolated price movements. Such a feat could happen in two main ways: either Ethereum receives more inflows than Bitcoin, or Bitcoin could crash more than Ethereum during a market-wide correction.
The first scenario would most likely translate into a continued rotation into Ethereum and the broader altcoin market, paving the way for an altcoin season. Nevertheless, both scenarios will otherwise, Bitcoin’s strong dominance declines massively.
Featured image from Pixabay, chart from Tradingview.com