In recent weeks, the buzz surrounding the Bitcoin ETF and price halving has increased demand for BTC relative to Ethereum.
Since switching to proof-of-stake (PoS), Ether, the native token of Ethereum, has been trading around a 15-month low in relation to Bitcoin.
Will it deteriorate worse for the rest of 2023? Let's examine the charts in more detail.
Critical support is breached by the price of Ethereum relative to Bitcoin.
Earlier this week, the ETH/BTC pair fell as low as 0.056 BTC. As a result, the negative risks for 2023 were increased as the pair fell below its 200-week exponential moving average (200-week EMA; the blue wave).
For ETH/BTC bulls historically, the 200-week EMA has been a dependable support level. For instance, three months after the pair tested the wave support in July 2022, it recovered 75%. However, after losing the same backing in October 2020, it fell by almost 25%.
The loss of support from the 200-week EMA for ETH/BTC in 2023 leaves it vulnerable to a similar selloff. In this instance, the next target on the downside appears to be in 2023, at its 0.5 Fib line near 0.051 BTC, down about 9.5% from the present price levels.
On the other hand, if the 200-week EMA is reclaimed as support, the price of ETH may rise again towards its 50-week EMA (the red wave), which is close to 0.065 BTC.
Ethereum is overshadowed by the Bitcoin bubble.
Data on institutional capital flow shows that Ethereum has remained weaker than Bitcoin.
For instance, according to CoinShares, the total amount invested in Bitcoin-specific investment funds as of October 6 was $246 million (YTD). Ethereum funds, on the other hand, have seen capital losses, with $104 million in outflows over the same time frame.
The gap is probably caused by increased speculation about a potential future U.S. approval of an exchange-traded product (ETF) for Bitcoin.
Trade experts claim that the launch of a spot Bitcoin ETF will draw $600 billion. The fourth halving of Bitcoin, which will occur on April 24, 2024, is also helping it to outperform the altcoin market.
A optimistic argument based on historical precedent states that the halving will drop the block reward for Bitcoin miners from 6.25 BTC to 3.125 BTC, cutting the fresh supply in half.
DISCLAIMER: We don't provide any investment advice.
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