Ethereum is strong as it writes but still underperforms Bitcoin. While Ethereum is hovering above $2,400 and could even break $3,000 in the coming years, the rapid consolidation of the world’s most valuable cryptocurrency, on the other hand, could push the Ethereum/Bitcoin ratio to its lowest levels in several months.
ETH struggles against Bitcoin, ETH/BTC ratio drops to 40-month low
As of September 20, IntoTheBlock data Reveals ETH is trading at its lowest level against Bitcoin in over 40 months. This trend clearly shows that the market, even with institutional participation, is bullish on BTC.
Interestingly, Ethereum continues to underperform despite the approval of Ethereum-specific ETFs for trading in July 2024. The approval of these complex derivatives has allowed institutions to gain exposure to the second most valuable cryptocurrency within the confines of the law without bankrupting the bank as it did.
Previously, institutions in the United States seeking to purchase Ethereum could only do so by purchasing Grayscale ETHE shares. The problem was that fees were higher when the financial world was unaware of Ethereum’s regulatory status. While nothing has changed, the approval of spot Ethereum ETFs, which prevent issuers from holding the coins that customers are buying, was seen as a win.
The US Securities and Exchange Commission (SEC) has yet to make an official statement endorsing ETH as a commodity similar to Bitcoin. However, the Commodity Futures Trading Commission (SEC) has repeatedly stated that ETH is a commodity.
As Ethereum slides against Bitcoin, IntoTheBlock analysts are convinced that institutional investors are confident in Bitcoin’s prospects. Specifically, they point to Bitcoin’s relative stability compared to Ethereum, an asset with a higher risk-reward profile.
Will Ethereum find support?
Even with this assessment, it is worth noting that Bitcoin remains a transaction layer, and benefits from the advantage of being first to move. On the other hand, Ethereum is the first smart contract platform, hosts many innovations ranging from DeFi to NFTs, and is now leading the tokenization process.
Earlier, BlackRock CEO Larry Fink said that Real Asset Tokenization (RWA), which is mostly on Ethereum, will reach $1 trillion in market cap. BlackRock issued builda product that tokenizes US Treasury bonds on Ethereum.
It remains to be seen whether Ethereum will recover against Bitcoin. Looking at the daily chart, the trend seems to be changing, at least in the short term. The two bullish bars formed on September 18 and 19 were confirmed today.
Meanwhile, ETH appears to be consolidating, turning from the 61.8% Fibonacci retracement level of the 2020 to 2021 trading range.