Ethereum (ETH) has lost its three-year support against Bitcoin (BTC) as the leading cryptocurrency rallied towards its $100,000 target on Friday, November 22. ETH has faced persistent resistance at $3,500 for nearly four months while competitors have hit record highs this cycle.

Ethereum Loses Favor with Institutional Investors, ETF Performance Lackluster

Ethereum slipped to a low of 0.03187 against Bitcoin on Friday, November 22. As Bitcoin advanced towards its $100,000 target, Ethereum’s price dropped below a support level that had been maintained for nearly three years since 2021.

The decline of Ethereum against Bitcoin is likely due to several factors, including a lack of interest from institutional investors, a steady decline in interest from retail investors, and the shift of capital and attention to Layer 2 and Layer 3 scaling projects.

The performance of the Ethereum Spot ETF highlights how the altcoin has struggled to attract institutional investment, while Bitcoin Spot ETF continues to outperform. Data reveals that ETH ETFs have experienced net negative flows or outflows for the past six days, whereas Bitcoin Spot ETFs continue to attract substantial institutional fund flows.

Tuur Demeester, Editor-in-Chief of Adamant Research, noted that Ethereum might be “dying a slow death,” indicating a shift in market dynamics and a slowdown in institutional adoption.

Solana Challenges Ethereum’s Dominance, On-Chain Analysis

While Ethereum ETF performance struggles, the altcoin faces a challenge from its competitor, Solana (SOL). Solana’s market capitalization gain and price rally have pushed SOL to the top four cryptocurrencies.

Solana surpasses Ethereum in terms of transaction volume across decentralized exchange platforms, DEX activity, and protocol fees generated in October and November 2024.

Although Ethereum’s price has increased slightly this week, it struggles with resistance at $3,500. Failure to break past this level could hinder further gains for the token.

On-chain metrics remain inconclusive. While active addresses are below mid-August 2024 levels, the funding rate on Binance has been consistently positive since mid-September 2024. Open interest in Ethereum futures has climbed to $10.35 billion, supporting a bullish outlook for the altcoin. If Ethereum successfully breaches resistance at $3,500, further gains are likely.

Bitcoin Leads Cryptos with Digital Gold Narrative

Ethereum remains the second-largest altcoin, and for much of the last decade, it has been compared alongside Bitcoin by analysts and traders. However, Bitcoin is increasingly seen as “digital gold,” used to hedge against geopolitical crises and market uncertainties, while Ethereum faces scalability issues.

Ethereum’s scalability challenges have paved the way for Layer 2 and Layer 3 protocols, whose tokens have yielded gains for traders in 2024. However, the base chain is slowly losing its appeal among market participants.

The digital gold narrative has drawn institutional attention, with some nations adding Bitcoin to their balance sheets. Meanwhile, Ethereum is still working on its promise of being a “decentralized computer” for the world.

Despite having a larger market capitalization than Bank of America as of November 22, Ethereum has yet to see gains in the current market cycle relative to meme coins and other cryptocurrencies like Solana.

Ethereum Future Expectations and Technical Analysis

ETH/BTC slipped to a near three-year low, dropping to a critical support level. The pair has been trending downward since September 2023. Technical indicators like the relative strength index (RSI) and momentum indicators support a bearish outlook. The RSI is at 31, close to the “oversold” zone under 30, typically generating a buy signal for traders.

Failure to recover from the support level could lead to further decline in the pair, with ETH/BTC potentially slipping lower in the next few weeks of 2024.

The ETH/USDT daily price chart shows positive signs. ETH could see gains and rally towards the $3,500 resistance and the May 2024 peak of $3,977 if upward momentum is maintained. Ethereum is less than 5% away from $3,500, and nearly 20% gains could push ETH to test the $3,977 May 2024 peak. The RSI at 65, below the overvalued level above 70, and the green histogram bars on the moving average convergence divergence indicator suggest further gains for Ethereum.

If Ethereum maintains its steady climb, the $4,000 level, a psychologically important price, could be breached in the short term. However, a correction could send Ethereum to test support at $3,000, a key level throughout 2024. Further decline would mean Ethereum might find support at the lower boundary of the range at $2,111.

Strategic Considerations

Ethereum enjoys a strong correlation with Bitcoin, at 0.91. This implies that a significant spike in Bitcoin price could lead to gains in Ethereum. However, if Bitcoin corrects, it could add to the challenges faced by Ethereum in overcoming resistance at $3,500.

Traders should monitor the volume of options and open interest in Ethereum before adding to their positions.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

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