According to Cointelegraph, Ethereum's native token, Ether (ETH), has recently fallen below a crucial support level against Bitcoin (BTC), raising concerns among analysts about its future performance. The ETH/BTC pair has broken below an ascending trendline that has historically marked its market bottoms since 2016. This trendline previously supported significant rebounds, including a 300% increase between December 2020 and December 2021 and an 1,800% surge from January 2017 to May 2017.
In November 2024, Ethereum bulls failed to maintain this support, resulting in a 15% drop in the ETH/BTC pair, accompanied by increased trading volumes. In technical analysis, losing a support level amid rising trading activity suggests strong selling pressure, indicating potential further declines for ETH/BTC in the coming weeks. Tuur Demeester, founder of Bitcoin hedge fund Adamant Capital, commented that "Ethereum is dying a slow death."
The underperformance of ETH/BTC in 2024 is attributed to several factors, including the launch of spot Bitcoin exchange-traded funds (ETFs) in the United States and the lackluster performance of Ethereum's own spot ETF. Additionally, Bitcoin's fourth halving in April has increased its attractiveness to both retail and institutional investors, leading to a capital shift from Ethereum to Bitcoin. Ethereum has also faced competition from Solana (SOL), a top rival in smart contracts, with the SOL/ETH pair surging over 925% since December 2022.
Ethereum's market dominance has declined significantly, reaching its lowest point since April 2021. Technical analysis indicates that ETH/BTC is entering the breakdown stage of an inverse cup-and-handle (IC&H) pattern. This pattern is characterized by a rounded top, signaling a loss of momentum in an uptrend, followed by a smaller upward consolidation before resuming a downward move. If the IC&H pattern plays out, ETH/BTC could drop to 0.017 BTC, a key support level from the August 2019-January 2020 period, representing a 50% decline from current prices.
However, a strong rebound from the current support level of around 0.0317 BTC, which aligns with the 0.786 Fibonacci line, could invalidate the IC&H pattern and potentially push the pair towards 0.043 BTC by the end of 2024. It is important to note that this article does not provide investment advice or recommendations. Every investment and trading decision involves risk, and readers are encouraged to conduct their own research before making any decisions.
