Can Ethereum Outperform Bitcoin | Credit: Derek Fenech
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Key Takeaways
The Ethereum (ETH) to Bitcoin (BTC) ratio has increased by 5% last week.
Ethereum has trended downward against Bitcoin for over 1,000 days.
Is this the beginning of a significant rally, or will the ETH weakness continue?
The price of Ethereum has trended downward against Bitcoin since December 2021, leading to a decline of over 50%. The decrease accelerated in June 2024 after ETH broke down from a long-term horizontal support area.
However, ETH finally created a bullish candlestick last week, offering temporary relief. Will this mark the beginning of a longer-term period of ETH outperformance against BTC, or will it be a weekly blip in a lengthy downtrend?
Ethereum’s Sentiment Analysis
Ethereum sentiment on X is mostly negative. There are concern’s about the consistent selling by the Ethereum Foundation this year. On Sept. 22, data from Lookonchain revealed that the Ethereum foundation sold 100 ETH once more. This year, it has sold 3,566 ETH, worth nearly $10 million.
Other factors are contributing to Ethereum investors’ frustration. Among them is the inflationary supply since the Dencun upgrade and the seemingly unbeneficial activity of Layer-2 solutions.
Ethereum Researcher Justin Drake offers a contrary opinion. He states that Ethereum’s value lies in its decentralization, security, and censorship resistance. As Drake noted, Ethereum has over $10 billion in economic security (though that has declined to 8.7 billion since the tweet).
Combined with the fact that only 28.7% of ETH is staked, compared to 68% for Solana, this economic security has further room to grow.
With that said, the ETH/BTC chart finally created a bullish candlestick last week, stopping a trend of five consecutive weekly declines. The upward movement has continued so far this week.
ETH/BTC Bottom?
Well-known crypto analyst MaxBecauseBTC suggests that the ETH/BTC ratio has finally bottomed. He predicts a pronounced increase for the next three quarters. Depending on which fractal is followed, he predicts either a high of ₿0.1 or a new all-time high of ₿0.18.
Even though ETH has trended downward against BTC for the past 1,022 days, some preliminary bullish signs are developing. The most important one is the bullish divergence in the weekly RSI.
The divergence is unusual because the first bottom was inside oversold territory while the second one was outside of it. Previously, such a divergence transpired in Aug. 2019 and led to a 445% price increase.
The bullish divergence also transpired at the support trend line of a long-term descending parallel channel.
However, the Ethereum price action continues to underwhelm. ETH trades in the channel’s lower portion and below the main resistance area at ₿0.052. The resistance area coincides with the channel’s resistance trend line.
So, while ETH may move upward toward this area, leading to a 25% increase, the trend cannot be considered bullish until ETH breaks out.
Short-Term Rally
Despite some preliminary bullish signs in the ETH/BTC chart and the on-chain data, ETH still has to show more strength to confirm its trend reversal against Bitcoin.
Since a short-term positive ETH/BTC movement is likely, whether the price breaks out afterward can determine the future trend’s direction.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Valdrin Tahiri is a cryptocurrency analyst and reporter at CCN, specializing in technical analysis with a focus on Elliott Wave theory, on-chain metrics, and fundamental research. He brings over seven years of experience in the crypto space as both a trader and writer.
He discovered cryptocurrencies in 2017 while earning his MSc in Financial Markets at the Barcelona School of Economics, which sparked a deep interest in blockchain and market dynamics. Since then, he’s contributed to top crypto outlets like BeInCrypto and CoinGape.
Valdrin also served as Community Manager of BeInCrypto’s Telegram group for three years, helping grow it into one of the largest crypto communities worldwide. His expertise in market structure and price patterns allows him to break down complex trends into clear, actionable insights.
He’s published thousands of articles covering altcoins, Bitcoin cycles, and macro trends.
