In recent trading, the price of Ethereum’s native token, Ether (ETH), has reached a 15-month low against Bitcoin (BTC). This is also the lowest point since Ethereum switched to proof-of-stake (PoS).
Can ETH Price Reverse Course?
With this downward trend, the question arises: Will Ethereum continue to weaken for the remainder of 2023? To find out, let’s take a closer look at the charts.
Ethereum Price Breaks Below Critical Support vs. Bitcoin
The ETH/BTC pair dropped to as low as 0.056 BTC this week, breaking below its 200-week exponential moving average (200-week EMA). This breach raises the downside risks for Ethereum in 2023.
Historically, the 200-week EMA has acted as a strong support level for ETH/BTC bulls. For example, after testing this support level in July 2022, the pair rebounded 75% in three months. Conversely, when it lost the same support in October 2020, it dropped over 25%.
Looking forward, if ETH/BTC continues to lose its 200-week EMA as support, the next downside target could be around its 0.5 Fibonacci line near 0.051 BTC, which represents a 9.5% decrease from current levels. On the other hand, if Ethereum reclaims the 200-week EMA as support, it may rebound towards its 50-week EMA near 0.065 BTC.
Bitcoin Bull Case Overshadows Ethereum
Ethereum’s weakness compared to Bitcoin is also reflected in institutional capital flow data. Bitcoin-specific investment funds have attracted $246 million year-to-date, whereas Ethereum funds have experienced outflows worth $104 million during the same period.
This discrepancy is likely due to the growing buzz around the potential approval of a Bitcoin exchange-traded product (ETF) in the U.S. It is estimated that a spot Bitcoin ETF launch could attract $600 billion. Additionally, Bitcoin’s upcoming fourth halving event on April 24, 2024, is also seen as a positive factor for Bitcoin compared to the altcoin market.
The halving will reduce Bitcoin miners’ block reward from 6.25 BTC to 3.125 BTC, a change that has historically been associated with a bullish trend due to the decreased new supply.
It’s important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment decisions.