3 reasons why the price of Ethereum will fall after Bitcoin in 2024
Ether (ETH) price moves to 40-month lows with Bitcoin as it continues to track BTC's price performance in 2024.
ETH is up just 0.02% from its January 1st open, while Bitcoin (BTC) is up an estimated 36% in 2024.
Ether, Bitcoin's year-to-date performance. Source: TradingView
Let's look at some of the reasons for Ether's poor performance.
ETH has trended lower against BTC over the past 90 days.
Ether is down 34% over the past 90 days, while Bitcoin has underperformed, with its price down 15% over the same period.
The ETH/BTC ratio has fallen approximately 22% over the past three months, reaching a multi-year low of 0.04057 on September 11.
ETH/BTC ratio. Source: TradingView
A decline in the ETH/BTC ratio indicates a lack of demand for Ether, with investors preferring Bitcoin over ETH.
To put this in context, US spot Bitcoin ETFs have outperformed spot Ethereum ETFs since they were approved by the Securities and Exchange Commission (SEC) on January 10.
Onchain data provider Glassnode reports that the relative impact of these investment products on the price of Ether is less than the impact on the price of Bitcoin (8%) (1% of the position).
“This shows that the appetite for the Bitcoin ETF will continue to be an order of magnitude greater than its Ethereum counterpart. “Comparing the impact of ETFs on the ETH and BTC markets. Source: Glassnode
Bitcoin's market dominance continues to rise.
In addition to Ether's lackluster performance in the BTC pair, ETH was negatively impacted by Bitcoin's increasing dominance.
As reported by Cointelegraph, the dominance of the Bitcoin market continued its upward trend in 2024, reaching a 40-month high of 58% on August 5. This indicates that the top cryptocurrency is strengthening against altcoins, including Ether.
Bitcoin market dominance chart. Source: TradingView
Bitcoin Dominance measures BTC's market capitalization relative to the overall crypto market and highlights the strength of its assets. Often used by investors to gauge market sentiment.
As Bitcoin's dominance continues to increase, the price of ETH is expected to decline against BTC pairs, suggesting that investors are feeling more bullish about BTC and possibly allocating less money to Ether investments.
Related: VanEck, StoneX Analysts Raise Ether's Value From $12k to $22k
Ethereum onchain parameters are slow.
Measuring the active addresses on the network provides a fast and reliable indicator of the effective use of the blockchain and the need for the underlying token.
The current 30-day average is 430,250 daily active addresses on the Ethereum network, down 7.7% from 90 days ago and unchanged from the 686,350 seen in May 2021. , suggesting a reduction in Ether token transactions.
30-day average daily active addresses on Ethereum. Source: Gassnode
Measuring the number of unique active wallets (UAWs) on the Ethereum blockchain provides a broader view of DApp usage on the network.
According to DAppRadar data, Ethereum DApps active addresses have decreased by 19% in the last 30 days. In general, the data is disappointing, competing blockchains such as Solana and Tron showed a 257% and 343% increase in total UAWs.
Ethereum Network 30-Day DApps Activity. Source: Dapradar
Continued network growth, increased Ether transactions, and DApp usage are needed for ETH to rise above $2,400.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
