Ethereum Price Faces Continued Downward Pressure Against Bitcoin

Ethereum’s price has been on a steady decline against Bitcoin, and a rare chart pattern suggests that more downside could be on the horizon. Currently, Ethereum (ETH) is trading at 0.01890 BTC, marking its lowest level since January 2020 and reflecting an 80% drop from its peak in 2021.

Market Share Challenges for Ethereum

One of the key reasons behind Ethereum’s decline is its shrinking market share across major sectors of the cryptocurrency industry. Data indicates that protocols within Ethereum’s network processed $56 billion worth of transactions in April, a figure notably lower than Solana’s $72 billion during the same period.

Additionally, Ethereum is increasingly losing ground to layer-2 networks designed to enhance scalability and transaction speeds without compromising security. For instance:

  • Base: A layer-2 network developed by Coinbase, processed $20 billion in transactions in April.
  • Unichain: A layer-2 network launched in February, handled $3.4 billion in transactions.
  • Arbitrum: Another layer-2 solution, processed $14.3 billion in April.

These transactions, in theory, would have been handled by Ethereum’s main network, further highlighting its declining dominance in the sector.

Bitcoin Dominance and Ethereum’s Decline

Ethereum’s struggles are compounded by Bitcoin’s growing dominance in the cryptocurrency market. Bitcoin currently commands a 63% market share, up significantly from its year-to-date low of 18%. This represents Bitcoin’s highest market share since November 2021. In contrast, Ethereum’s market dominance has fallen to just 7%, its lowest point since April 2018.

Technical Analysis of Ethereum Price

From a technical perspective, the ETH/BTC pair has experienced a sharp decline, peaking at 0.08810 BTC in December 2021 before plunging to its current level of 0.01890 BTC. This represents an 80% drop over this period.

The weekly chart reveals several bearish indicators:

  • Moving Averages: Ethereum remains below both the 50-week and 100-week moving averages, signaling sustained downward pressure.
  • Money Flow Index (MFI): The MFI has fallen to an oversold level of 14, indicating weak buying activity.
  • Average Directional Index (ADX): The ADX has risen to 48.75, pointing to strong bearish momentum.

One of the most concerning signals is the formation of an inverse cup and handle pattern on the weekly chart. This bearish continuation pattern is characterized by a horizontal support line and a rounded top, often leading to further downside. If this pattern plays out, the next key level to watch is 0.0070 BTC, which marked the bottom in December 2016. A breach of this level could pave the way for a possible retest of the all-time low at 0.0019 BTC.

Key Takeaways:

  • Ethereum’s price has dropped significantly, driven by declining market share and competition from layer-2 networks.
  • Bitcoin’s growing dominance continues to overshadow Ethereum’s presence in the market.
  • Technical indicators suggest that bearish momentum remains strong, with the potential for further downside.

Stay informed about the latest developments in cryptocurrency markets and keep an eye on Ethereum’s price trends as the industry continues to evolve.

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