Recent months have seen Ethereum [ETH] facing challenges in maintaining an upward trend, contrasting with the continuous rise of Bitcoin [BTC] to new peaks.
Consequently, Ethereum has been struggling to compete with Bitcoin, as BTC.Dominance has driven the pair to recent lows.
Currently, the ETH/BTC pair is exchanging at $0.031, reaching a four-year low. This decline raises apprehensions regarding the future outlook for Ethereum and its potential for a turnaround.
Ethereum’s Ongoing Struggle against Bitcoin
Over the past year, Bitcoin has demonstrated notable growth, surging by 144.45%. It has skyrocketed from $40K to $101K as of the latest update, with an all-time high (ATH) of $109K within the same timeframe.
In contrast, Ethereum has seen modest gains during this period, rising by 30.27% and reaching $3219 at the time of publication. At present, ETH remains roughly 33% below its ATH of $4891 attained in 2021.
With the ETH/BTC ratio plummeting to 0.031, all gains made over the past four years have been wiped out. Historically, the pair hit its peak at 0.087 in 2021 during a strong surge in altcoins.
However, subsequent to reaching that level, the altcoin has faced considerable downward pressure.
Factors Driving this Downward Trend
Several factors have contributed to Ethereum’s underwhelming performance against Bitcoin. Notably, the flagship cryptocurrency has garnered extensive interest from institutions and governmental bodies.
Many governments are exploring the idea of establishing Bitcoin reserves, fostering greater preference and adoption rates for BTC when compared to other digital assets.
Conversely, Ethereum has witnessed a decline in adoption rates, as the number of new addresses has dropped by 9.32%.
This decline in addresses is mirrored in an escalating NVT ratio, which has surged to 185.5, indicating reduced transaction activity. Consequently, transactions on the Ethereum network have been on a consistent decline.
This diminishing network activity raises concerns regarding overvaluation, further dampening ETH’s performance.
Future Outlook
Given the shrinking market preference, Ethereum could face further losses, extending its underperformance against Bitcoin.
This potential downturn is corroborated by the MVRV ratio plummeting to 0.64, indicative of bearish investor sentiment and low confidence in short-term price recovery.
Consequently, in the near term, Ethereum is grappling with significant bearish sentiment, potentially driving ETH down to $3160. Nevertheless, if buyers perceive this decline as a buying opportunity, Ethereum might bounce back to $3300 and aim for $4k.
This resurgence would bolster the ETH/BTC pair, propelling it to reclaim $0.04.