Can Ethereum Reverse Course and Break Its 15-Month Losing Streak Against Bitcoin?

The price of Ethereum’s native token, Ether (ETH), is currently experiencing a 15-month low compared to Bitcoin (BTC). This is also the lowest price since Ethereum switched to proof-of-stake (PoS). Many wonder if this downward trend will continue throughout the remainder of 2023. In this article, we will take a closer look at the charts and analyze the potential for a reversal in Ethereum’s price.

Ethereum Price Breaks Critical Support Against Bitcoin

The ETH/BTC pair recently dropped to as low as 0.056 BTC, breaking below its 200-week exponential moving average (200-week EMA). Historically, the 200-week EMA has served as a reliable support level for ETH/BTC bulls. When the pair tested this support level in July 2022, it rebounded by 75% in just three months. On the other hand, when it lost this support in October 2020, it dropped by over 25%.

ETH/BTC weekly price chart. Source: TradingView

With the recent break below the 200-week EMA, the ETH/BTC pair faces the risk of further sell-offs in 2023. The next potential downside target is around the 0.5 Fib line near 0.051 BTC, which is approximately 9.5% lower than the current price levels. However, if Ethereum manages to reclaim the 200-week EMA as support, it may see a rebound towards its 50-week EMA (the red wave) near 0.065 BTC.

Bitcoin Overshadowing Ethereum in Institutional Capital Flow

Ethereum’s continuous weakness compared to Bitcoin is also evident in the institutional capital flow data. Bitcoin-specific investment funds have attracted $246 million year-to-date (YTD), while Ethereum funds have experienced outflows worth $104 million in the same period.

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Net flows into crypto funds (by asset). Source: CoinShares

This discrepancy can be attributed to the growing buzz about a potential spot Bitcoin exchange-traded product (ETF) approval in the United States. Analysts believe that the launch of a spot Bitcoin ETF could attract around $600 billion. Additionally, Bitcoin’s upcoming fourth halving on April 24, 2024, is also acting as a bullish catalyst compared to the altcoin market.

The halving will reduce the block reward for Bitcoin miners from 6.25 BTC to 3.125 BTC. This phenomenon is based on historical precedent and cuts the new supply in half, which has traditionally been a bullish indicator for Bitcoin’s price.

This article does not provide investment advice or recommendations. Every investment and trading decision involves risks, and readers should conduct their own research before making any decisions.

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