Ethereum’s native token, Ether (ETH), plunged to its lowest level in three years against Bitcoin (BTC) on August 5 amid global market turmoil. The sharp drop brought ETH/BTC’s year-to-date performance down 25%.
Ether continues to underperform Bitcoin despite the launch of a long-awaited spot exchange-traded fund (ETF) in the US, which many analysts predict could be a catalyst for institutional capital to enter the Ethereum market.
Solana is beating Ether
Ethereum’s underperformance against Bitcoin comes in the context of its waning dominance over its biggest rival, Solana (SOL).
In particular, the SOL/ETH pair rose by 10.75% over the last 24 hours, reaching a new all-time high of 0.064 ETH on August 8. This surge coincided with the launch of the spot Solana ETF in Brazil.
Meanwhile, this is part of a rally that began in June. Since then, the pair has rebounded by about 75%.
Ethereum ETF Debuts Laggardly Compared to Bitcoin
The long-anticipated launch of a spot Ethereum ETF in the United States has received a surprisingly cold reception from investors. According to Farside Investors data, the investment vehicle has seen $387.7 million in outflows since it began trading on July 23.
By comparison, the Bitcoin ETF has recorded net flows in its first two weeks since its launch on January 11.
Bitcoin is primarily seen as a “store of value.” Ethereum, on the other hand, is seen as a platform for decentralized applications (DApps) and smart contracts. These fundamental differences can influence the preferences of traditional investors.
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For example, according to Coingecko, only six publicly traded companies hold Ether as a reserve asset, compared to 29 companies that hold Bitcoin as a reserve asset.
Ether is on the descending channel
From a technical perspective, Ethereum’s decline against Bitcoin is part of a downtrend that has been occurring within a descending channel since September 2022.
In May this year, ETH/BTC tested the upper trendline of the channel at around 0.056 BTC and has since corrected by up to 30%. Interestingly, the same upper trendline coincides with two other resistance levels, the 50-week (red) and 200-week (blue) exponential moving averages (EMA).
Nonetheless, as of August, Ether is testing the lower trendline of the channel for a bounce, with a potential upside target of 0.050 BTC. This level coincides with the 0.236 Fibonacci correction level of ETH/BTC.
Ether’s weekly Relative Strength Index (RSI) is at 34.60, about 4 points below the overheated sell limit, making a rebound move more likely. The overheated sell RSI typically precedes a rebound or consolidation period.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.