Ethereum (ETH) Struggles Against Bitcoin, But Analysts See Potential Recovery

Ethereum (ETH), the second-largest cryptocurrency by market capitalization, is currently trading at $2,363, marking a 40-month low against Bitcoin (BTC). While Bitcoin has surged approximately 36% in 2024, ETH has barely moved, trading just 0.02% above its January 1 opening price.

Factors Behind Ethereum’s Underperformance

ETH/BTC Ratio Decline

The ETH/BTC ratio has dropped by about 22% over the last three months, reaching a multi-year low of 0.04057 on September 11. This decline indicates a lack of demand for Ether, with investors seemingly preferring Bitcoin.

Impact of ETFs

While both cryptocurrencies have seen the introduction of spot ETFs, Bitcoin ETFs have been notably more successful. Onchain data provider Glassnode reports that ETFs have a lower relative influence on Ether’s price (1% of spot volume) compared to Bitcoin (8% of spot volume).

Rising Bitcoin Dominance

Bitcoin’s market dominance reached a 40-month high of 58% on August 5, 2024, suggesting a strengthening position against altcoins, including Ethereum.

Sluggish Onchain Metrics

Ethereum’s network activity shows signs of decline:

• The 30-day average of daily active addresses (430,250) has decreased by 7.7% from 90 days ago.
• Ethereum DApps have seen a 19% decline in unique active wallets over the past 30 days, while competing blockchains like Solana and Tron have experienced significant growth.

Potential for Recovery

Despite the current underperformance, some analysts remain optimistic about Ethereum’s future:

1. Crypto strategist Kaleo predicts a rise to $4,400 for ETH, suggesting that a local bottom has formed.
2. Technical analysis indicates that Ethereum is attempting a recovery above the $2,320 zone, with key resistance levels at $2,400 and $2,500.
3. The hourly chart shows a break above a short-term declining channel, potentially signaling an upward trend.

ETH/USD Technical Analysis

However, Ethereum must clear the $2,400 resistance to gain bullish momentum in the near term. Failure to do so could lead to another decline, with support levels at $2,330 and $2,250.