3 reasons why the price of Ethereum has decreased with Bitcoin
Ethereum's native token Ether (ETH) is trading at a 15-month low against Bitcoin (BTC), and the lowest since Ethereum switched to proof-of-stake (PoS).
Cointelegraph takes a closer look at some of the reasons behind the continued decline of the ETH/BTC pair.
Ether's historical price action has changed
In previous market cycles, Ethereum often outperformed BTC in bull market trends, but this relationship began to change in early 2023. Ether and many altcoins The narrative around altcoins has come under pressure in 2022 and 2023 in Web3, DeFi and NFTs.
Tighter regulations on the crypto industry, with income streams from retail and institutional investors largely muted, and an increase in investors seeking shelter in US-dollar-pegged stablecoins, have weighed on Ethereum's sentiment.
The supremacy of Bitcoin will rise
In addition to the change in the performance of Ether in the BTC pair, ETH has been negatively affected by the constant increase in dominance of Bitcoin. According to Cointelegraph,
“Bitcoin's market dominance has reached 54%, which is the highest in the last 30 months, which indicates that the cryptocurrency is gaining strength before the halving event scheduled for April 2024.”
Bitcoin Dominance is a measure of BTC's market capitalization relative to the overall crypto market and highlights the strength of the asset and is often used by investors as a gauge of sentiment. With the Bitcoin halving fast approaching (April 2024) and investors believing that a BTC ETF is imminent, a drop in the price of Ether in the BTC pair suggests that investors are feeling more bullish about BTC and may be allocating less money to Ether investments.
Related: Bitcoin Dominance Hits 54% – Highest BTC Halving in 2.5 Years
Ethereum price breaks below critical support against Bitcoin.
The ETH/BTC pair dropped to 0.050 BTC on October 23 and has been in decline ever since. A notable event is the pair's fall from the 200-week moving average close to 0.058 BTC, which raises the possibility of further declines in the short term.
Yash Gola as Cointelegraph Contributor,
“The 200-week EMA has historically served as a reliable support level for ETH/BTC bulls. For example, the pair recovered 75% three months after testing wave support in July 2022. Conversely, it declined more than 25% after losing the same support in October 2020.”
These factors may continue to influence Ethereum's price relative to Bitcoin. Mixed market volatility, investor sentiment and a strong regulatory environment are likely to remain major headwinds on the ETH/BTC pair for the foreseeable future.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
