Why is Ethereum losing market share to Bitcoin?

Why Is Ethereum Losing Market Share To Bitcoin?


Ethereum's native token, Ether (ETH), fell to a three-year low against Bitcoin (BTC) on Aug. 5 amid global market turmoil. This sharp drop has sent ETH/BTC down 25% year-to-date.

ETH/BTC Daily Price Chart. Source: TradingView

Despite the long-awaited launch of exchange-traded funds (ETFs) in the United States, Ethereum has been steadily outperforming Bitcoin, which—as many analysts predicted—could be a catalyst to attract institutional capital to the Ethereum market.

Solana is beating the ether

Ethereum's underperformance is relative to Bitcoin.

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In particular, the SOL/ETH pair increased by 10.75% in the last 24 hours to reach a new high of 0.064 ETH on August 8.

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SOL/ETH Daily Price Chart. Source: TradingView

Meanwhile, it is part of the rehabilitation that started in June. Since then, the pair has risen approximately 75 percent.

Weak Ethereum ETF compared to Bitcoin

The much-anticipated launch of spot Ethereum ETFs in the US has received a surprisingly lukewarm response from investors. Data from Farside Investors indicated that $387.7 million has been withdrawn since these investment vehicles began trading on July 23.

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Ethereum ETF flows. Source: Farside Investors

In comparison, Bitcoin ETF flows were positively positive in the first two weeks since their launch on January 11.

Bitcoin is primarily seen as a “store of value”.

Related: Jump Trading Ether Dump: Smart Move or Trouble Sign?

For example, according to CoinCo, only six public companies hold Ether as backup, compared to 29 companies in Bitcoin's case.

Ether rides down the channel

From a technical point of view, Ether's decline is part of an ongoing downtrend against Bitcoin in the current downtrend since September 2022.

In May of this year, ETH/BTC tested the high trend of the channel at around 0.056 BTC and then corrected up to 30%. Interestingly, the same uptrend is aligned with two other resistances, namely the 50-week (red) and 200-week (blue) exponential moving averages (EMA).

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ETH/BTC weekly price chart. Source: TradingView

However, since August, Ether has been testing the lower trend line of the channel with a potential target of growth around 0.050 BTC. This level corresponds to the ETH/BTC 0.236 Fibonacci retracement line.

With Ether's weekly Relative Strength Index (RSI) reading at 34.60, just four points away from its oversold threshold, the possibility of a rebound is likely to increase. An oversold RSI typically precedes a period of recovery or consolidation.

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.

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