Chart Analysis: ETH/BTC Pair Drops to Lowest Level Since Ethereum's Switch to PoS
The price of Ethereum's native token, Ether (ETH), is currently trading at a 15-month low compared to Bitcoin (BTC). This comes as Ethereum recently switched to proof-of-stake (PoS). But will this downward trend continue for the rest of 2023? Let's delve into the charts to find out.
Breaking Support Level: ETH/BTC Pair Falls Below 200-Week EMA
The ETH/BTC pair recently dropped to as low as 0.056 BTC, breaking below its 200-week exponential moving average (EMA). This support level, represented by the blue wave on the chart, has historically been reliable for ETH/BTC bulls. In the past, the pair has rebounded strongly after testing this support. However, now that it has been breached, downside risks for 2023 are heightened.
Downside Target: 0.5 Fib Line near 0.051 BTC
With the loss of the 200-week EMA support, the next downside target for the ETH/BTC pair is around its 0.5 Fibonacci line, which is near 0.051 BTC. This represents a decrease of approximately 9.5% from the current price levels.
Potential Rebound: Reclaiming the 200-Week EMA as Support
If Ethereum can reclaim the 200-week EMA as support, there is a possibility of a rebound towards its 50-week EMA, represented by the red wave on the chart, near 0.065 BTC.
Institutional Capital Flow Data Reflects Ethereum's Weakness
The ongoing weakness of Ethereum compared to Bitcoin is evident in institutional capital flow data. Bitcoin-specific investment funds have attracted $246 million year-to-date, while Ethereum funds have experienced outflows worth $104 million in the same period. This discrepancy may be attributed to the anticipation of a spot Bitcoin exchange-traded product (ETF) approval in the U.S., as well as the upcoming Bitcoin halving in 2024.
Bitcoin's Halving and Potential ETF Approval
Trade pundits predict that the launch of a spot Bitcoin ETF could attract $600 billion. Furthermore, Bitcoin's fourth halving, scheduled for April 24, 2024, is expected to act as a tailwind for Bitcoin against the altcoin market. The halving will reduce the block reward for Bitcoin miners by half, which has historically resulted in a bullish case due to the decrease in new supply.
Please note that this article does not provide investment advice or recommendations. Readers should conduct their own research and exercise caution when making investment decisions.
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