Why is Ethereum's Price Falling Against Bitcoin?

The price of Ethereum's native token, Ether (ETH) is currently at a 15-month low compared to Bitcoin (BTC), marking the lowest point since Ethereum switched to proof-of-stake (PoS).

In this article, we will delve into the reasons behind the continuous drop in the ETH/BTC pair and analyze the factors that have contributed to Ethereum's struggle against Bitcoin.

The Changing Dynamics of Ether's Price

In previous market cycles, Ethereum often outperformed BTC during bullish trends. However, this trend shifted in early 2023 due to several reasons. The narrative surrounding altcoins use within Web3, DeFi, and NFTs came under pressure in 2022 and 2023, causing Ether and numerous altcoins to face challenges.

Moreover, stringent regulations against the crypto industry, limited inflows from retail and institutional investors, and an increase in investors seeking refuge in US-dollar-pegged stablecoins have also impacted sentiment for Ethereum.

The Rise in Bitcoin Dominance

Additionally, ETH has been negatively impacted by the steady increase in Bitcoin's dominance. Bitcoin's market dominance recently reached 54%, its highest level in the last 30 months. This indicates that the top cryptocurrency is strengthening just before the halving event scheduled for April 2024.

Bitcoin dominance is a measure of BTC's market capitalization relative to the overall crypto market. It serves as an indicator of the asset's strength and is often used by investors as a sentiment gauge. With the Bitcoin halving approaching and the expectation of a spot BTC ETF, the decline in Ether's value against Bitcoin suggests that investors have a more bullish outlook on BTC and may be allocating less capital to Ether investments.

Ethereum's Price Breaks Critical Support Against Bitcoin

The ETH/BTC pair dropped to 0.050 BTC on October 23rd and has remained in a downtrend since then. Notably, the pair fell below its 200-week exponential moving average near 0.058 BTC. This breach raises the possibility of further downside in the short-term.

According to Cointelegraph contributor Yashu Gola,

"The 200-week EMA has historically served as a reliable support level for ETH/BTC bulls. For instance, the pair rebounded 75% three months after testing the support in July 2022. Conversely, it dropped over 25% after losing the same support in October 2020."

These factors mentioned above are likely to continue impacting Ethereum's price relative to Bitcoin. The complex market dynamics, investor sentiment, and strict regulatory environment are expected to remain significant challenges for the ETH/BTC pair in the foreseeable future.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.