Ethereum risks a 10% dip with Bitcoin despite ETH hitting highs.
Ethereum's record 32.33% equity ratio is reducing liquidity, reducing selling pressure and potentially supporting ETH's price recovery over time.
Ether (ETH) has fallen by 5.5% against Bitcoin (BTC) in the past week, and the bearish continuation setup now suggests that deeper losses are ahead.
Main Receptors:
The ethereal bear flag threatens a 10% correction
The ETH/BTC ratio has been forming a bearish flag pattern since February, consolidating in a rising parallel channel after a heavy downtrend.
In technical analysis, bear flags are typically seen as continuation patterns. Analysts take the previous high of the decline and lower it below the flag's lower trend line to come up with a lower target.
Using that method, the measured low target for the ETH/BTC pair comes near 0.026 BTC, 10% below the current level, in May.
Notably, a similar bearish flag breakout earlier this year saw a decline of about 15% earlier, suggesting that the current setup may favor Bitcoin over Ether in the near term.
Conversely, if ETH/BTC bounces back from the flagging lower trendline, opening the door to a recovery near the upper bound near 0.032 BTC in May, the bear breakout setup could be postponed.
Ethereum's stock ratio has reached record levels
Ethereum fundamentals are strengthening as ETH Bitcoin continues to lag.
According to data source Token Terminal, the network's share ratio reached a record 32.33%.
That's worth nearly $90.26 billion and marks the first time that more than a third of Ethereum's supply has been given to the network.
Earlier this month, the Ethereum Foundation's 70,000 ETH peak goal completion, shifted many of its holdings to yield positions rather than sell-side offerings.
Meanwhile, BitMine Immersion Technologies now holds 4.976 million ETH or 4.12% of the supply.
In general, it means that less ETH is available for active trading. That could reduce selling pressure and lower the value of the dollar over time, especially if demand increases while supply decreases.
Related: Ethereum whale opens $3.2K eyes as ETH price chart opens $90M long bets
Ether has fallen behind bitcoin in part because Ethereum's “ultrasound money” narrative has weakened, while bitcoin will continue to benefit from the acceleration of its accumulation by companies like Strategist and its incorporation into Wall Street portfolios.
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