Ethereum (ETH) is currently facing a significant selling pressure, resulting in a 23% decline and bringing its price down to yearly lows at $2,200. One of the major concerns for investors is the declining on-chain activity of Ethereum compared to Bitcoin. Ethereum’s total transaction fees have continued to decline, primarily due to lower fees after the Dencun upgrade. Additionally, the relative transaction count has dropped significantly from a record high of 27 in June 2021 to 11, which is one of the lowest levels since July 2020. These declining on-chain activities are impacting Ethereum’s performance and leading to its underperformance against Bitcoin.
Another factor contributing to Ethereum’s struggles is the shrinking institutional interest in the cryptocurrency. Ethereum ETFs have been underperforming compared to Bitcoin, with the ETH/BTC pair sitting at 0.0425, its lowest level since April 2021. The lack of institutional interest in Ethereum is affecting its price dynamics and making it difficult for the cryptocurrency to regain momentum in the market. Traders and investors have shown a clear preference for Bitcoin over Ethereum, as evidenced by the relative spot trading volume of ETH to Bitcoin dropping from 1.6 to 0.76 in the past week.
The supply dynamics of Ethereum are also not supportive of a price increase. Since the Dencun upgrade in early April, the total supply of ETH has steadily grown, reaching 120.323 million ETH, the highest level since May 2023. This increase in supply is putting downward pressure on Ethereum’s price and hindering its ability to perform well against Bitcoin. Moreover, Ethereum historically performs better relative to Bitcoin when its trading volume outperforms Bitcoin’s. However, with the current supply dynamics and declining on-chain activity, Ethereum may continue to underperform compared to Bitcoin in the near future.
Ethereum (ETH) is currently trading at $2,262 after a 23% drop from its local highs, testing local demand near its yearly lows of around $2,200. The cryptocurrency remains below its 4-hour 200 moving average (MA) at $2,565, indicating market weakness. For bulls to regain control, the price must break above this moving average and challenge the local highs at $2,600. Failure to hold support at the yearly low of $2,200 could lead to a deeper correction phase and potentially signal the start of a bear market for Ethereum. These key technical levels are critical for ETH’s short-term recovery and to prevent a further decline into bearish territory.
Ethereum’s struggles against Bitcoin are a result of declining on-chain activity, shrinking institutional interest, unfavorable supply dynamics, and technical challenges. The cryptocurrency faces significant selling pressure and fear as it struggles to regain momentum in the market. Investors and traders must closely monitor these factors to assess whether Ethereum can overcome these challenges and perform better against Bitcoin in the future.