With Bitcoin (BTC) hitting an all-time high (ATH) of $98,310 today, the ETH/BTC trading pair has fallen to multi-year lows, raising concerns about the relative strength of the second-largest digital asset, Ethereum (ETH).
What has caused Ethereum to underperform against Bitcoin?
Earlier today, Bitcoin's new ATH placed it less than $2,000 away from the coveted $100,000 mark. However, BTC's continued dominance has led to poor performance for altcoins, especially Ethereum, throughout the year.
The weekly chart below shows that the ETH/BTC trading pair has fallen to a multi-year low of 0.0331, a level not seen since March 2021. Since December 2021, the currency pair has failed to form new higher highs, declining over 60%.
Since July 2024, the currency pair's losses have accelerated, coinciding with a surge in Bitcoin's price, driven by rising optimism about the prospects of pro-crypto Republican candidate Donald Trump in the U.S. presidential election.
The success of Bitcoin exchange-traded funds (ETFs) has also contributed to institutional preference for BTC over other cryptocurrencies. Currently, the total net assets of BTC ETFs exceed $100 billion.
While Ethereum ETFs have also received regulatory approval, they have not compared to the success of Bitcoin ETFs. For example, so far, the total net assets of U.S. spot Ethereum ETFs are only $8.96 billion.
Other factors, such as Bitcoin's halving in April 2024—where miner rewards drop from 6.25 BTC to 3.125 BTC—further reinforce the supply scarcity narrative of BTC. In contrast, Ethereum's continuously rising issuance rate has led some experts to question its status as 'ultrasound money.'
Other factors, such as the Bitcoin halving in April—where miner rewards drop from 6.250 BTC to 3.125 BTC—further reinforce the supply scarcity narrative of digital assets. In contrast, Ethereum's continuously rising issuance rate has led some experts to question its status as 'ultrasound money.'
When can Ethereum recover its losses relative to BTC?
As the ETH/BTC trading pair hits new lows, Ethereum traders are eager to know when ETH can recoup its losses. Several analysts shared their views on X.
Cryptocurrency analyst @CryptoGemRnld recently identified two strong support areas: the trendline support area and the demand box area. According to the analyst, the ETH/BTC currency pair has historically bounced back from these levels since 2017, often leading to an altcoin season.
Similarly, experienced trader Peter Brandt indicated that the ETH/BTC ratio might be approaching a bottom. Brandt's analysis predicts a reversal could occur in December, with the trading pair beginning to rise.
Recent data suggests that ETH may be undervalued at current prices, supporting this view. Limited funds flowing into exchanges for ETH, along with a lack of significant profit-taking, indicate that ETH bulls are seeking further gains.
Additionally, the spot ETH ETF has recorded significant inflows, attracting over $515 million in funds during the period from November 9 to November 15. At the time of writing, ETH is trading at $3,333, having risen 7.4% in the last 24 hours.
