Today’s Ethereum-Bitcoin (ETH/BTC) trading pair slid below 0.04, a level last seen in April 2021. The declining ETH/BTC ratio could have multiple implications for the wider altcoin market.
Altcoins Might Suffer Due To Weak Ethereum
One of the key indicators to gauge the resiliency of the altcoin market is the ETH/BTC ratio. The ratio essentially tracks the relative price strength of Ethereum against Bitcoin and is widely considered a metric that could indicate the future potential price action of altcoins.
As of September 16, 2024, the ETH/BTC ratio sits at 0.039, a level it last touched 3 years ago in April 2021. In fact, after hitting a high of 0.088 in December 2021, the ETH/BTC ratio has been on a long-lasting decline, barring the occasional dead cat bounce, before further eroding in value.
Related Reading
Regarding altcoin price action, a surging ETH/BTC ratio indicates that Ethereum is performing well against Bitcoin. Conversely, a declining ratio suggests that Bitcoin outperforms Ethereum and other altcoins, which could trigger a shift in confidence away from Ethereum toward Bitcoin.
As a result, the wider crypto market might witness a sell-off in altcoins as capital seeks more stable and better-performing assets.
Currently, Bitcoin dominance (BTC.D) sits at 57.78%, and it can be observed that the metric has been on a steady uptrend since November 2022. An increase in BTC.D further solidifies a weakening altcoin market, hinting that liquidity is exiting small-cap tokens, which might lead to volatile price action and quick price drawdowns.
It’s worth highlighting that the US Securities and Exchange Commission’s (SEC) approval of Ethereum exchange-traded-funds (ETFs) didn’t quite turn out to be as significant an event for ETH price as it did for BTC.
Data from crypto ETF tracker SoSoValue shows that the cumulative net outflow for US Ethereum ETFs is $581 million, while the net inflow for US Bitcoin ETFs is $17.3 billion.
Can Ethereum Price Change Its Momentum?
Ethereum is exchanging hands at $2,282, a price level it last touched in January 2024. Notably, the second-largest cryptocurrency by market cap briefly touched the $3,900 mark, before losing all its gains.
Most recently, it was reported that 112,000 ETH was moved to crypto exchanges in one day, suggesting that investors might not be too keen on holding ETH while its price relative to Bitcoin weakens.
Related Reading
Some experts opine that now might be a good time to convert BTC holdings to ETH as they see a potential 180% surge in the battered ETH/BTC ratio.
The continual selling pressure on Ethereum has also moved ETH to oversold territory, giving hope to ETH holders that the digital asset has likely bottomed and might soon see a strong price recovery.
Featured image from Unsplash, Charts from Tradingview.com
This news is republished from another source. You can check the original article here
