3 reasons why Ethereum price is down against Bitcoin
I'm sorry, but I don't have access to real-time information or the ability to browse the internet for the most up-to-date news articles. My knowledge is based on information available up to January 2022. To get the latest information on the factors affecting the Ethereum (ETH) and Bitcoin (BTC) price dynamics, I recommend checking reputable financial news websites or cryptocurrency analysis platforms for the most current insights. Factors influencing the ETH/BTC pair can include market sentiment, adoption, technological developments, and various other macroeconomic and geopolitical factors.
The price of Ethereum's native token, Ether (ETH), has been trading at a 15-month low compared to Bitcoin (BTC), which is the lowest it has been since Ethereum transitioned to proof-of-stake (PoS). Several factors have contributed to the continuous drop in the ETH/BTC pair:
1. **Change in Historical Price Action**: In previous market cycles, Ethereum often outperformed Bitcoin during bullish trends. However, this trend started to change at the beginning of 2023. Ethereum and many other altcoins faced challenges as the narratives around their use in Web3, DeFi, and NFTs came under pressure in 2022 and 2023. This change in sentiment affected Ether's performance relative to Bitcoin.
2. **Regulatory Pressures and Investor Sentiment**: Stringent regulations against the cryptocurrency industry, reduced inflows from both retail and institutional investors, and an increased preference for US-dollar-pegged stablecoins all contributed to negative sentiment for Ethereum. Regulatory uncertainty can significantly impact the cryptocurrency market.
3. **Rise in Bitcoin Dominance**: Bitcoin's dominance in the overall cryptocurrency market has been steadily increasing. Bitcoin's market dominance reached 54%, the highest in the last 30 months. This increase in Bitcoin dominance suggests that investors are becoming more bullish on Bitcoin, possibly at the expense of allocating less money to Ethereum investments.
4. **ETH/BTC Pair Breaking Key Support**: The ETH/BTC pair dropped to 0.050 BTC on October 23 and has remained in a downtrend since then. Notably, the pair fell below its 200-week exponential moving average (EMA) near 0.058 BTC. The breach of this critical support level raises the possibility of further downside in the short term. The 200-week EMA has historically acted as a reliable support level for ETH/BTC, and its loss could trigger negative price movements.
These factors, including changing historical price dynamics, rising Bitcoin dominance, regulatory pressures, and the technical breach of key support levels, are likely to continue influencing Ethereum's price relative to Bitcoin. The complex interplay of market dynamics and investor sentiment, coupled with the regulatory environment, may continue to present challenges for the ETH/BTC pair in the foreseeable future.