4 Reasons Ethereum Will Finally Compare to Bitcoin
Ethereum's native cryptocurrency, Ether (ETH), has gained more than 20% against Bitcoin (BTC) since February 12. America in May this year.
However, the widely-watched ETH/BTC pair has reached a historical inflection point that could raise the risk of a correction in the coming days. Let us examine these hidden structures in detail as follows.
The Ethereum bearish fractal returns
Specifically, the four-hour ETH/BTC chart below shows Ether moving at the 1.00 Fibonacci retracement level at 0.06044 BTC. Furthermore, the relative strength index (RSI) reading has turned “overbought” after crossing above 70, indicating a correction.
The combination of these two technical data is very similar to the fractal before the 11.65% ETH/BTC decline from January 2024.
Specifically, an overbought RSI combined with a historical resistance level raises the possibility of buying fatigue among investors. This situation can lead to a decrease in the price of Ethereum against Bitcoin, starting with a decline to the 0.786 Fib line at 0.058 BTC.
A rising wedge pattern emerges
However, the presence of a rising wedge pattern, pending confirmation of a strike, has the potential to further depress the ETH/BTC exchange rate, which will drop from 10.85% in March to the 0.053 BTC level.
Rising wedge formations are generally considered bearish reversal indicators, indicating an upward or downward momentum shift.
ETH/BTC shows a descending triangle on the weekly chart
On the weekly timeframe chart, Ether is showing signs of a bearish reversal as it struggles to close above its multi-year descending trend line resistance. Interestingly, this trend coincides with ETH/BTC's 50-week exponential moving average (50-week EMA, red wave).
This resistance confluence can limit the attempts of Ether's reversal in the coming weeks, making the cryptocurrency more vulnerable to follow a pullback to the level of 0.051 BTC, which witnessed sharp rebounds in the period of June 2022 and October 2023-January 2024.
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Ethereum whale holdings have fallen
There is also a significant difference in the portfolios of Ethereum and Bitcoin major investors, often referred to as “whales”.
For example, according to Glassnode data, the number of entities holding 1,000-100,000 ETH decreased significantly in February.
The number of Bitcoin entities holding more than 1,000 BTC has increased, a trend attributed to increased capital inflows to recently introduced ETFs.
This basically shows the strong interest in Bitcoin over Ethereum among institutional investors, which in addition to technical factors reinforces the bearishness of ETH/BTC.
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.
