Ethereum price reaches new low against Bitcoin following transition to proof-of-stake

Ether (ETH) has experienced a 36% increase in its price in 2023, but it is still trading 66% below its November 2021 peak of $4,870. Recently, Ethereum reached its lowest levels against Bitcoin (BTC) in 14 months, raising concerns among investors. The decline in Ether’s price relative to BTC has led to questions about the reasons behind this trend and what it would take to reverse it.

Ethereum’s Downtrend Against Bitcoin

Ether’s decline against Bitcoin has disappointed many investors who were hopeful about the protocol upgrades that were expected to reduce coin inflation when Ethereum transitioned to a proof-of-stake consensus mechanism. The upgrades were successful, resulting in minimal coin issuance and a more sustainable supply. Despite these positive developments, Ether’s price quickly fell back to previous levels, dampening the optimism among Ethereum enthusiasts.

While the Ethereum network’s planned upgrades and developments have generally been on track, investors need to explore other potential factors that may reverse the current downtrend. One of these factors could be the ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission. The outcome of this legal battle could significantly impact Ether’s price momentum.

The Impact of Legal Battles

The Ripple case has raised concerns among Ethereum investors because of the presale of ETH directed toward institutional investors and the lock-up period associated with it. Even if Ripple were to secure a favorable outcome, the risks for Ethereum may not immediately be mitigated. Regulatory uncertainty surrounding the Ether initial coin offering (ICO) remains a source of concern, and recent movements of dormant addresses in the market cycle have amplified these concerns.

Despite these challenges, Ethereum has seen some positive surprises. ARK Invest and 21Shares have requested a spot Ether exchange-traded fund, which could reduce institutional concentration in Bitcoin and benefit Ethereum. Canto, a Cosmos-native blockchain, expanding to Ethereum’s layer 2, is also a positive development that brings traditional finance into the Ethereum ecosystem.

In contrast, Ethereum’s competitors in the decentralized applications sector, such as Solana and BNB Chain, also face regulatory risks related to ICOs and securities regulations. This makes it unlikely for them to challenge Ethereum’s dominance in terms of total value locked and trading volumes.

Conclusion

Despite the challenges and setbacks, Ethereum remains a leading force in the cryptocurrency space. The downtrend in Ether’s price against Bitcoin may be influenced by various factors, including legal battles and regulatory uncertainties. However, positive developments and Ethereum’s strong position in the market suggest that there is still hope for a reversal of this trend in the future.

Editor’s Notes

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