Ethereum’s native token, Ether (ETH), has been on a multi-month downtrend against Bitcoin (BTC) and this trend has continued in March, with ETH rising only 5.5% compared to BTC’s 19.5% gains on a month-to-date (MTD) timeframe. As of March 23, the ETH/BTC pair was down about 9% MTD to 0.0633, and is on course to record its worst month since September 2022 when it fell 11.75%.
From a fundamental perspective, traders have preferred Bitcoin over Ether, hoping it will protect them from the ongoing banking turmoil in the U.S. and other parts of the world. This narrative has gained momentum in recent weeks as Wall Street investors like Cathie Wood see Bitcoin as a potential “flight to safety” asset. As a result of the growing speculation, Bitcoin outperformed traditional assets after March 8, when signs of trouble appeared at Silicon Valley Bank. In doing so, BTC also fared better than the altcoin market combined, including Ethereum.
From a technical perspective, however, Ethereum is positioned for a comeback versus Bitcoin. At least two technical indicators pose the possibility that ETH/BTC will rebound sharply in the coming weeks. First, the pair’s three-day relative strength index (RSI) has dropped below 30, which technical analysts consider an “oversold” area. Second, Ether’s drop versus Bitcoin has landed its price near its ascending support level (buy zone in the chart).
A similar scenario in the June-July 2022 session preceded an approximately 60% rally toward ETH/BTC’s descending trendline resistance (sell zone in the chart). If the fractal plays out, the pair could rally toward the same resistance level by June 2023. In other words, Ether has a decent chance of rebounding by more than 15% to around 0.075 BTC. Conversely, a break below the ascending trendline support will invalidate the bullish fractal.
It’s important to note that every investment and trading move involves risk, and readers should conduct their own research when making a decision. This article does not contain investment advice or recommendations. However, there are other factors that could potentially contribute to a rise in Ethereum’s value.
One major factor is the upcoming Ethereum 2.0 upgrade, which will move the network towards a proof-of-stake consensus mechanism. This shift is expected to make the network more energy-efficient and scalable. The upgrade will also introduce a new set of features and benefits that will make it more attractive to developers and users alike.
Additionally, the rise of decentralized finance (DeFi) on the Ethereum network has been a major driver behind its popularity and use case. Many projects within the DeFi ecosystem rely on Ethereum and its smart contract capabilities. As the adoption of DeFi continues to grow, so too does the demand for Ethereum.
Finally, Ethereum’s ecosystem is constantly expanding with new projects, applications, and partnerships being announced regularly. This continued growth and innovation within the Ethereum community could potentially lead to a rise in its value.
Overall, while Ethereum may be facing a downtrend against Bitcoin in the short term, there are several factors that could contribute to a potential rebound in the future. The upcoming Ethereum 2.0 upgrade, the growth of DeFi, and the continued expansion of its ecosystem all present reasons for optimism among Ethereum investors and enthusiasts.