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Ethereum (ETH) is currently facing significant selling pressure and fear after a 23% drop, bringing its price to a yearly low of $2,200. One of the main concerns for investors is ETH’s continued underperformance against Bitcoin, a trend that has persisted since September 2022. Since then, Ethereum has fallen 44% against Bitcoin.
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This dramatic drop has left investors and traders wondering about the reasons behind Ethereum’s struggles. A recent report from CryptoQuant sheds some light, highlighting several factors that could be affecting ETH’s performance. As market participants continue to monitor ETH’s movements, many are wondering whether the asset can regain momentum or if further declines are in store in the coming weeks.
Ethereum Unveiled: CryptoQuant Report Sheds Light
CryptoQuant’s recent report sheds light on the factors currently affecting Ethereum (ETH). Declining on-chain activity, diminishing institutional interest, and the disappointing performance of Ethereum ETFs relative to Bitcoin are among the main contributors to Ethereum’s struggles, with the ETH/BTC pair now sitting at 0.0425, its lowest level since April 2021.
Ethereum’s underperformance appears to be related to weaker network activity dynamics relative to Bitcoin. For example, Ethereum’s total transaction fees continued to decline, primarily due to fee declines following the Dencun upgrade. The relative number of transactions also dropped dramatically, from a record high of 27 in June 2021 to 11, one of the lowest levels since July 2020.
Additionally, Ethereum’s supply dynamics are not favorable for a price increase. Since early April, the total supply of ETH has been steadily increasing following the Dencun upgrade. The current supply is 120.323 million ETH, the highest level since May 2023.
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Additionally, traders and investors have shown a clear preference for Bitcoin over Ethereum, as the relative spot trading volume of ETH versus Bitcoin has dropped from 1.6 to 0.76 in the past week. Ethereum’s price has historically increased relative to Bitcoin when its trading volume surpasses Bitcoin’s.
Considering these factors, Ethereum could continue to underperform against Bitcoin in the near future.
ETH Price Evolution
Ethereum (ETH) is currently trading at $2,262 after a significant 23% decline from its local highs. Volatility and uncertainty continue to drive the market as ETH tests local demand near its yearly lows of around $2,200.
The cryptocurrency remains well below its 4-hour moving average (MA) at $2,565, a critical indicator that typically signals market strength. For bulls to regain control, it is essential for the price to break above this moving average and challenge local highs at $2,600.
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However, if Ethereum fails to hold support at its yearly low of $2,200, the price will likely enter a deeper correction phase, potentially signaling the start of a bear market. This level is crucial for ETH’s short-term recovery, as losing it could trigger further selling pressure. Bulls must retake these key levels to prevent ETH from sliding into prolonged bearish territory.
Featured image of Dall-E, chart by TradingView
