The Ethereum price is hovering around annual lows compared to the dominant cryptocurrency, Bitcoin. This decline, notable since September 2022, has resulted in ETH being worth just $1,594 at the time of writing.
However, amid concerns over Ethereum’s remarkable plunge, there are indications of a possible trend reversal, according to the latest report. report from crypto research agency K33 Research.
Ethereum price drops, underlying reasons
K33 Research, a renowned figure in the crypto analytics space, has been keeping a close eye on the relationship between Ethereum and Bitcoin. Their recent findings highlight a tangible difference in market preferences between these two titans.
Ethereum’s native token is under pressure and hovering at a trading value near 0.06 Bitcoin. This trend can be traced back to a pivotal moment in Ethereum’s timeline: the transition from proof-of-work to proof-of-stake consensus, a migration called “The Merge.”
However, Ethereum’s trajectory is not just a product of its internal variation. External market factors have also played their role. The Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs) sectors have seen their buzz wane, which has indirectly cast a shadow on Ethereum’s performance.
Lunde, senior analyst at K33, along with vice president Anders Helseth, reflected on this scenario in their recent report. The analysts pointed out:
Ether has been on a steady downward trend all year as DeFi and NFT activity has declined. Without meaningful stories or adoption stories, ether has struggled to maintain its strength against bitcoin
Market sentiments and potential catalysts
Furthermore, insights from derivatives traders on the Chicago Mercantile Exchange (CME) reveal bearish sentiment towards Ethereum. According to the report, despite a notable 60% increase in open interest since August, the difference between ETH futures prices and the spot market remains significantly smaller than that of Bitcoin.
Lunde and Helseth interpret this data to suggest that expectations that potential ETH futures ETFs will be approved in the coming weeks have not captured the attention of CME Ethereum traders.
However, not everything seems bleak for Ethereum. Despite the bearish landscape, analysts at K33 are optimistic about a shift by year-end. According to the report, the possible adoption of new Ethereum futures-based Exchange Traded Funds (ETFs) could reverse this trend.
Such financial products could reinvigorate the market, attract more institutional interest, and potentially increase Ethereum’s value relative to Bitcoin. If approved, they could not only increase the confidence of existing investors but also attract new participants to the ETH platform.
Meanwhile, Ethereum and Bitcoin have suffered losses over the past week. Ethereum is down 2.1% with a current trading price of $1,591, and Bitcoin is down 3.7% with a current price of $26,212.
Featured image from Shutterstock, Chart from TradingView