Ethereum is solid at the time of writing, but is still underperforming Bitcoin. ETH is hovering above $2,400 and could hit $3,000 in the coming years, but on the other hand, the rapid rise of the world’s most valuable coin could push the ETH/BTC rate to its lowest level in months.
ETH Struggles Against Bitcoin, ETH/BTC Ratio Drops to 40-Month Low
As of September 20, ETH is trading at its lowest level against Bitcoin in 40 months, according to IntoTheBlock data. This trend clearly shows that the market is bullish on BTC despite institutional involvement.
Interestingly, ETH is still underperforming despite the approval of a spot Ethereum ETF in July 2024. This complex derivatives approval allowed institutions to gain exposure to the second most valuable coin within the confines of the law without breaking the bank.
Previously, institutions that wanted to buy ETH in the US had to buy Grayscale ETHE shares. The problem was that the fees were higher when the financial sector was unaware of ETH’s regulatory status. Nothing changed, but the approval of a spot Ethereum ETF, which prevents issuers from staking the coins that customers bought, was seen as a victory.
The U.S. Securities and Exchange Commission (SEC) has yet to make a formal statement endorsing ETH as a Bitcoin-like commodity, but the Commodity Futures Trading Commission (SEC) has repeatedly stated that ETH is a commodity.
As ETH falls against BTC, IntoTheBlock analysts are convinced that institutional investors are confident in Bitcoin’s prospects. Specifically, they point out that Bitcoin is relatively stable compared to Ethereum, an asset with a higher risk-return profile.
Can Ethereum Find Support?
Despite this assessment, it is important to note that Bitcoin is still a transaction layer and enjoys a first-mover advantage. Ethereum, on the other hand, is the original smart contract platform and is leading the way in innovations ranging from DeFi to NFTs and is currently leading the way in tokenization.
Earlier, BlackRock CEO Larry Fink said that tokenization of real-world assets (RWAs) will account for $1 trillion in market cap, mostly on Ethereum. BlackRock launched BUIDL, a product that tokenizes U.S. Treasuries on Ethereum.
It is not yet known whether ETH will recover against BTC. Looking at the daily chart, the trend seems to be changing. At least for now. The double bar bullish formation of September 18th and 19th was confirmed today.
At the same time, ETH is showing strength and appears to be breaking out of the 61.8% Fibonacci correction level of its 2020-2021 trading range.