Despite the launch of the Spot Ethereum ETFs, the $ETH price has continued to seriously underperform Bitcoin, as well as many of the large cap altcoins. Is this about to change?
Ethereum still the dominant layer 1 for smart contracts
Ethereum (ETH) was a poster child of the last bull market. It’s the number 2 cryptocurrency by market cap, and the heir apparent to become the foremost layer 1 blockchain for the majority of future dApps.
However, changing from proof-of-work to proof-of-stake consensus, the inability to accomplish the necessary scaling and speed, and the rise of its major competitor in Solana, have meant that the Ethereum journey has been fraught with difficulties.
All this said, Ethereum is still very much the dominant layer 1 for smart contracts, it still has a preponderance of developers, and the $ETH price surely cannot continue to wane against the other major cryptocurrencies.
$ETH bounces from critical support
Source: TradingView
Friday is looking positive so far for the $ETH price. Up nearly 2% on the day so far, $ETH has recovered more than 23% since that ‘grey’ Monday on the 5 August, when the Japanese stock market crashed.
That dip for $ETH went as far down as its bull market support trend line, all the way down at $2,120, which also happens to be very strong horizontal support. Currently bouncing off of the 0.618 fibonacci level, $ETH looks to be going higher against the dollar.
Long, downward trend for $ETH against $BTC
Source: TradingView
However, the chart that arguably really matters, is the ETH/BTC pairing. Looking at the daily chart, it can be seen that $ETH has been in a long downward trend against $BTC since the beginning of September 2022. In fact, during the Japan crash, the $ETH price even fell out of the downward channel, but $ETH bulls bought the price back inside once more.
ETH/BTC pair arrives at pivotal level
Source: TradingView
Zooming out into the weekly time frame, it becomes apparent that in spite of the long sideways and downwards movement against $BTC, the price of $ETH is still in an uptrend. Critical support has now been reached, and now it depends on the market as to whether the $ETH price bounces from here, or whether the support breaks.
Given that $ETH has now seen a 54% retrace against $BTC since the local high of mid-December 2021, it might be expected to start reversing this trend. In addition, the stochastic RSI is bottoming, and a cross back up can add impetus to the $ETH cause.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
