As of the latest update, Ethereum (ETH) appears to be encountering some resistance in its performance against Bitcoin (BTC), with the ETH/BTC price trend displaying significant losses. The previously noted bullish divergence for ETH seems to have weakened as it nears the 0.04 BTC threshold.
If Bitcoin continues its upward momentum towards the $61k-$62k range following its recovery past $57k, ETH is likely to experience further declines.
Currently, ETH is struggling to find a strong support level, prompting traders to await more favorable market conditions for any potential recovery. The ongoing influx of funds may offer some stability to ETH; however, for the time being, it remains in a weaker position compared to Bitcoin.
The ETH/BTC Relative Strength Index (RSI) has emphasized this divergence, showcasing a decline in price performance alongside higher RSI lows, indicating a possibility of a reversal in the near future.
With decreasing trading volume, there are indications that ETH could soon drop below the 0.04 BTC mark. Any weakening in Bitcoin’s position could offer an opportunity for ETH to reverse its current trend. Until a confirmation of this reversal is observed, the bearish outlook for ETH remains the most likely scenario.
Institutional Selling of ETH on the Rise
Moreover, prominent global institutions are now actively offloading their Ethereum holdings, according to reports from Lookonchain on X.
For example, Metalpha recently transferred 6,999 ETH, valued at $16.4 million, to Binance, contributing to a total deposit of 62,588 ETH amounting to $145.1 million over the past six days.
With just 23.5k ETH remaining in their holdings, valued at $55 million, Metalpha has liquidated Layer 2 tokens like Optimism (OP) and decreased its staked ETH (stETH) positions to 1,907 stETH.
Trading Volume of Ethereum CME Contracts
In addition, the dwindling Futures trading volume for ETH on the Chicago Mercantile Exchange (CME) is expected to keep ETH under pressure against BTC. The volume dropped by 28.7% to $14.8 billion in August, marking its lowest point since 2023.
On a year-to-date basis, ETH’s performance has been negative, with its exchange-traded funds (ETFs) witnessing negative net cumulative flows. Further, the Ethereum Foundation has been selling off ETH, exerting additional downward pressure on its price.
These factors indicate that ETH may face continued declines before a potential recovery, likely in Q4 2024.
Sentiment Analysis: Crowd and Institutional Views
Lastly, sentiment analysis from both the crowd and smart money signals a bearish outlook for ETH. Retail traders and institutional investors seem to align on the bearish sentiment surrounding ETH in the existing market conditions.
This unity in opinion between individual and large-scale investors suggests that Ethereum’s downward trajectory may persist until there is a shift in market dynamics or a significant catalyst emerges to support a price rebound.
Therefore, ETH is anticipated to remain in a weak position against Bitcoin, particularly until overall market conditions within the crypto space witness improvement.