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Ethereum (ETH) is currently facing significant selling pressure and concerns after a 23% drop, which sent its price to a yearly low of $2,200. One of the main concerns for investors is the continued underperformance of Ethereum compared to Bitcoin, a trend that has continued since September 2022. Since then, Ethereum has fallen by 44% against Bitcoin.
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This massive drop has left investors and traders wondering what’s behind Ethereum’s struggles. A recent report from CryptoQuant provides some clarity, pointing out several factors that could be affecting Ethereum’s performance. As market participants continue to monitor Ethereum’s movements, many are wondering whether the asset can regain its momentum or if further declines are expected in the coming weeks.
Ethereum Unveiled: CryptoQuant Report Sheds Light
The last Report from CryptoQuant It provides an explanation of the factors currently affecting Ethereum (ETH). Declining on-chain activity, diminishing institutional interest, and the disappointing performance of Ethereum exchange-traded funds compared to Bitcoin are among the major factors contributing to Ethereum’s struggles, with the ETH/BTC pair now sitting at 0.0425, its lowest level since April 2021.
Ethereum’s weak performance appears to be linked to weaker network activity dynamics compared to Bitcoin. For example, Ethereum’s overall transaction fees have continued to decline, largely due to lower fees following the Duncan upgrade. The relative transaction count has also fallen significantly, falling from a record high of 27 in June 2021 to 11, one of the lowest levels since July 2020.
Moreover, Ethereum’s supply dynamics do not support a price increase. Since early April, the total supply of Ethereum has been growing steadily following the Dencon upgrade. The current supply stands at 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, with the relative spot trading volume of Ethereum versus Bitcoin declining from 1.6 to 0.76 in the past week. Ethereum has historically gained ground relative to Bitcoin when its trading volume outpaces Bitcoin.
Given these factors, Ethereum’s underperformance compared to Bitcoin may continue in the near future.
ETH Price Action
Ethereum (ETH) is currently trading at $2,262 after a massive 23% drop from its local highs. Volatility and uncertainty continue to drive the market as Ethereum tests local demand near its yearly lows around $2,200.
The cryptocurrency remains well below its 4-hour 200 moving average (MA) at $2,565, a crucial indicator that usually signals market strength. For bulls to regain control, it is essential for the price to break above this MA and challenge the local highs at $2,600.
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However, if Ethereum fails to hold the support at the yearly low of $2,200, the price is likely to enter a deeper correction phase, which could signal the beginning of a bear market. This level is important for Ethereum’s short-term recovery, as losing it could lead to more selling pressure. Bulls need to reclaim these key levels to prevent Ethereum from sliding into a prolonged bearish zone.
Featured image by Dall-E, chart by TradingView