Why Ethereum (ETH) is falling behind Bitcoin? Major report explains ETH’s struggles
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Ethereum (ETH) is currently facing significant selling pressure and fear after a 23% drop, with the price dropping to a yearly low of $2,200. One of the main concerns for investors is the continued underperformance of ETH compared to Bitcoin, a trend that has been ongoing since September 2022. Since then, Ethereum has fallen 44% compared to Bitcoin.
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This dramatic decline has left investors and traders wondering what is causing Ethereum’s difficulties. A recent report from CryptoQuant provides some clarity, pointing out several factors that could be influencing ETH’s performance. As market participants continue to monitor ETH’s movements, many are wondering whether the asset will regain momentum or if further declines are expected in the coming weeks.
Ethereum Exposure: CryptoQuant Report Sheds Light
A recent report from CryptoQuant provides clarity on the factors currently influencing Ethereum (ETH). Declining on-chain activity, declining institutional interest, and the underperformance of Ethereum ETFs compared to Bitcoin are among the major contributing factors to Ethereum’s struggles, with the ETH/BTC pair currently sitting at 0.0425, its lowest level since April 2021.
Ethereum’s underperformance appears to be related to weaker network activity dynamics compared to Bitcoin. For example, Ethereum’s total transaction fees have continued to decline, largely due to lower fees following the Dencun upgrade. The relative transaction count has also decreased significantly, dropping from a record high of 27 in June 2021 to 11, the lowest since July 2020.
Moreover, Ethereum’s supply dynamics do not support a price rally. Since early April, the total supply of ETH has steadily increased since the Dencun upgrade. The current supply is 120,323,000, the highest since May 2023.
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Additionally, traders and investors have shown a clear preference for Bitcoin over Ethereum, as the relative spot volume of ETH versus Bitcoin has decreased from 1.6 to 0.76 in the past week. Ethereum’s price has historically risen against Bitcoin when its trading volume is higher than Bitcoin’s.
Given these factors, Ethereum is likely to underperform Bitcoin in the near future.
ETH Price Activity
Ethereum (ETH) is currently trading at $2,262 after a massive 23% drop from its local high. Volatility and uncertainty continue to dominate the market, with ETH testing local demand near its yearly low of $2,200.
The cryptocurrency is holding well below the 4-hour 200-day moving average (MA) at $2,565, which is usually a key indicator of market strength. For the bulls to regain control, it is essential that the price breaks this MA and challenges the local high of $2,600.
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However, if Ethereum fails to hold support at its yearly low of $2,200, the price is likely to enter a deeper correction phase, potentially signaling the start of a bear market. This level is important for ETH’s short-term recovery, as a loss of it could trigger additional selling pressure. The bulls need to retake this key level to prevent ETH from sliding into long-term bearish territory.
Featured image from Dall-E, chart from TradingView
