The cryptocurrency sector has come under intense pressure this past week, with Bitcoin and Ethereum leading the crash and multiple cryptocurrencies. hitting new multi-month lows. THE the crash was more pronounced with Bitcoinhowever, and the imbalance in selling pressure discreetly modifies the relationship between the two assets.
The interesting imbalance is reflected in Ethereum’s performance relative to Bitcoin. A technical analysis of the ETH/BTC ratio shared on social media platform
Long-term triangle on the verge of breakdown
According to the technical analysis of the ETH/BTC 2-week chart, Ethereum is we are approaching an important point against Bitcoin after years of consolidation under a descending trendline. This long-term trend originated from a major spike in relative valuation in July 2017, when 1 ETH was worth 0.154 BTC in Bitcoin terms, and has since formed a series of lower highs to form a downward resistance trendline. The lower boundary of this pattern is a long-tested support area around 0.02 that has been drawn repeatedly. buying interest for Ethereum compared to Bitcoin.
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At the time of writing, the ETH/BTC ratio is trading around 0.030. However, the most recent two-week candlestick turned green, and this development is important for the bullish outlook for Ethereum’s performance against Bitcoin.
The bullish projection is based on a full spread of the green candlestick with a push towards the descending triangle resistance trendline. If the pair can convincingly cross the upper trendline of the descending triangle with sustained momentum, this would allow Ethereum to enter a phase of sustained outperformance against Bitcoin.
How high could ETH/BTC reach in the event of a breakout?
Crypto analyst Jonathan Carter has outlined a series of potential upside targets if the ETH/BTC pair break out of its downward trend. The first target is around 0.040 BTC, which would represent a clear departure from the compressed range seen over the past few months. If momentum continues, potential targets higher include 0.060, 0.085, 0.105, 0.124 and up to the 2017 high of 0.154.
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Translating these ratio-based targets into absolute price levels is less straightforward, as the projections are based on Ethereum’s performance relative to Bitcoin and not autonomous price movements. Such performance can occur in two main ways: either Ethereum receives more inflows than Bitcoin, or Bitcoin could crash more than Ethereum during a market-wide correction.
The first scenario would most likely result in a sustained rotation into Ethereum and the broader altcoin market, paving the way for an altcoin season. However, both scenarios will see the otherwise, Bitcoin’s strong dominance falls massively.
Featured image from Pixabay, chart from Tradingview.com
