Ethereum (ETH) traders are navigating choppy waters as the ETH/BTC ratio—an indicator of Ethereum’s performance relative to Bitcoin (BTC)—hits its lowest level since March 2021. This sharp decline has raised concerns about continued price volatility and the potential for further downturns in the near term.
Analysts Divided on ETH/BTC’s Recovery Prospects
Market sentiment regarding the ETH/BTC ratio is split. Alex Thorn, head of research at Galaxy, recently highlighted the pair’s descent to a “new multi-year low of 0.03496,” expressing skepticism over an immediate reversal. Similarly, market analyst Zach Voell warned traders not to be “distracted by the election” as ETH/BTC’s downward trend continues.
ETHBTC with new multi-year lows 0.03496 pic.twitter.com/QonJFQJUme
— Alex Thorn (@intangiblecoins) November 5, 2024
Crypto commentator Colin Talks Crypto also joined the bearish chorus, predicting “more drops” for the trading pair.
ETH/BTC is going to drop more.
— Colin Talks Crypto 🪙 (@ColinTCrypto) November 1, 2024
I will begin rotating back from BTC into ETH when we reach the green box.$ETHBTC pic.twitter.com/GSxqofjpB5
However, some analysts look to historical data as a hopeful sign for ETH bulls. In March 2021, when the ETH/BTC ratio dropped to comparable levels, it rebounded significantly within two months, reaching 0.077 in May 2021 as Ether surged to $3,928. This historical precedent fuels optimism among traders like Beniah, who anticipates an “epic” rally.
Digital Assets Research notes the “ugly” state of ETH/BTC, pointing out Ethereum’s Relative Strength Index (RSI) at 27.63 on the weekly timeframe—signifying an oversold market. This is only the second time ETH’s RSI has reached such an extreme, but the firm suggests that holding a key macro support level could trigger a reversal. They also highlight seasonal and cyclical trends in the altcoin market, which might offer ETH/BTC a chance to recover from its current oversold state.
Bitcoin’s Strength Could Pressure ETH/BTC
Despite the potential for a rebound, the upcoming U.S. presidential election injects uncertainty into the market. Many expect Bitcoin to experience significant gains by year-end, which could further weaken the ETH/BTC ratio if Ether doesn’t keep pace. For the ratio to climb, Ethereum’s price must outperform Bitcoin’s—a challenging prospect in a bull market dominated by BTC.
Adding to the complex scenario, CryptoQuant contributor Amr Taha recently reported an influx of 82,000 ETH (worth approximately $200.49 million) into derivative exchanges, signaling a potential “downturn or increased volatility” for ETH. This movement aligns with a recent Bitfinex analysis, which anticipates a “massive spike in volatility” following the election, possibly leading to substantial “moves” or a deeper “correction” for Bitcoin.
Outlook: Volatility Likely Ahead
As Ethereum grapples with its multi-year low against Bitcoin, analysts remain divided on whether ETH can recover. The ETH/BTC ratio is historically low, and with Bitcoin’s potential for strong year-end performance, Ether’s path to resurgence may be steep. For now, market watchers are bracing for heightened volatility as Ethereum and Bitcoin respond to macroeconomic pressures and upcoming political events.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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