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Ethereum (ETH) is currently navigating through troubled waters, marked by a worrying 23% decline that has pulled its price down to an alarming yearly low of $2,200. This downturn highlights a broadening gap between Ethereum and its arch-rival, Bitcoin, a disparity that has become more pronounced since September 2022, with Ethereum depreciating by 44% against Bitcoin. The crypto community is rife with speculation and concern as this pattern unfolds, leaving many to ponder the underlying causes of Ethereum’s pronounced underperformance. A recent in-depth analysis by CryptoQuant has shed some light on this issue, pinpointing several key factors that have contributed to Ethereum’s lackluster performance in the face of Bitcoin’s dominance. This revelation has sparked a flurry of discussion among investors and traders, all eager to understand the potential trajectory of Ethereum’s market performance in the weeks to come.
The report from CryptoQuant meticulously dissects the various elements at play in Ethereum’s struggle. It highlights a constellation of issues including diminishing on-chain activity, waning institutional interest, and the lukewarm reception of Ethereum ETFs, especially when juxtaposed against those of Bitcoin. The ETH/BTC pair, now at a sobering low of 0.0425 since April 2021, mirrors Ethereum’s underwhelming network activity dynamics. For instance, a notable drop in Ethereum’s total transaction fees has been observed, mainly due to the lower fees post the Dencun upgrade. Furthermore, a significant fall in the transaction count has been recorded, plunging from a peak of 27 in June 2021 to a mere 11, marking one of its lowest points since July 2020. These factors, combined with a not quite optimistic supply dynamic—where the total supply of ETH has seen a steady increase since the Dencun upgrade, currently standing at 120.323 million ETH, the highest since May 2023—spell trouble for Ethereum’s price growth prospects.
Amidst these challenges, the preference of traders and investors for Bitcoin over Ethereum has become glaringly obvious. This shift is vividly reflected in the relative spot trading volume of ETH to Bitcoin, which plummeted from 1.6 to 0.76 in the past week. Historically, Ethereum’s price relative to Bitcoin has surged when its trading volume surpassed that of Bitcoin. Given the current market dynamics, this trend suggests that Ethereum might continue to trail behind Bitcoin in the foreseeable future. The market’s anticipation is palpable, as participants keenly watch for any signs that might indicate a reversal or continuation of Ethereum’s underperformance.
In the current trading environment, Ethereum’s price action paints a bleak picture for its short-term prospects. After a steep 23% fall from its local highs, ETH is trading at $2,262, struggling to find solid ground near its yearly lows around $2,200. The market is engulfed in volatility and uncertainty, with Ethereum’s price dangling far below its 4-hour 200 moving average (MA) at $2,565—a traditional marker of market strength. For a bullish resurgence, Ethereum needs to breach this moving average and tackle the local highs at $2,600. Failure to sustain support at its yearly low could trigger a deeper correction phase and potentially mark the beginning of a bear market for Ethereum, emphasizing the critical nature of current support levels in averting a prolonged bearish downturn.
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