The price of Ethereum’s native token, Ether (ETH), has reached a 15-month low compared to Bitcoin (BTC). This is also the lowest point since Ethereum switched to proof-of-stake (PoS). Many investors are now wondering if this downward trend will continue for the remainder of 2023.
Looking at the charts, the ETH/BTC pair has dropped to as low as 0.056 BTC this week. This has caused the pair to break below its 200-week exponential moving average (EMA), which is a critical support level. Historically, the 200-week EMA has served as a reliable support level for ETH/BTC bulls. For example, when the pair tested this support level in July 2022, it rebounded 75% three months later. However, when it lost this support in October 2020, it dropped over 25%. This suggests that the pair may face similar selloff risks in 2023. The next downside target is around its 0.5 Fib line near 0.051 BTC, which is about 9.5% lower than the current price levels. On the other hand, if ETH manages to reclaim the 200-week EMA as support, it may rebound towards its 50-week EMA near 0.065 BTC.
The institutional capital flow data also reflects Ethereum’s weakness compared to Bitcoin. Bitcoin-specific investment funds have attracted $246 million year-to-date, while Ethereum funds have experienced outflows worth $104 million in the same period. The growing buzz about a potential Bitcoin exchange-traded product (ETF) approval in the U.S. is likely contributing to this discrepancy. Trade pundits argue that a spot Bitcoin ETF launch could attract $600 billion. Furthermore, Bitcoin’s fourth halving event on April 24, 2024, is acting as a tailwind for Bitcoin compared to the altcoin market. The halving will reduce Bitcoin miners’ block reward from 6.25 BTC to 3.125 BTC. Based on historical precedent, this reduction in new supply has been seen as a bullish factor.
However, it’s important to note that this article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making any decisions.
Source link