Ethereum’s native token, Ether (ETH), has dropped to its multi-year lows in opposition to Bitcoin (BTC), prompting analysts to foretell additional declines within the coming weeks.

Falling knife warning furthers sell-off dangers

On March 13, ETH/BTC—a pair that tracks Ether’s energy in opposition to Bitcoin—dropped by over 1.50% to succeed in $0.022, its lowest degree since Might 2020.

ETH’s descent is a part of its multi-year downtrend that began when it established a report excessive of $0.156 in June 2017. Since then, it has plunged by greater than 85%, underscoring Ether’s rising weak spot in opposition to Bitcoin.

In the meantime, on the two-week ETH/BTC chart, the relative energy index (RSI), a momentum indicator used to measure whether or not an asset is overbought or oversold, has fallen to a report low of 23.32.

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ETH/BTC two-week value chart. Supply: TradingView

Usually, when RSI drops under 30, it alerts oversold circumstances, probably resulting in a value rebound.

Nonetheless, in Ethereum’s case, RSI has continued to plunge even decrease even two months after turning into oversold, suggesting that ETH’s downtrend continues to be accelerating fairly than stabilizing.

Crypto analyst Alessandro Ottaviani has described the state of affairs as a “falling knife” situation—a time period used to explain an asset that’s experiencing a speedy and steep decline, typically discouraging patrons from stepping in too quickly.

A falling knife implies that trying to catch the asset at a perceived low may result in additional losses if the downtrend persists.

For Ethereum to sign a possible reversal, merchants will probably be looking ahead to RSI stabilization and reclaim of key resistance ranges. That ideally begins with a rebound from the 0.022 BTC degree, which had restricted ETH/BTC’s draw back makes an attempt in December 2020, resulting in a 300% rally.

ETH/BTC weekly value chart. Supply: TradingView

Ought to a rebound occur, the ETH/BTC pair can rally towards its 0.382 Fibonacci retracement line at round 0.038 BTC, aligning with the 50-week exponential shifting common (50-week EMA; the crimson wave).

Till then, the technical outlook means that ETH/BTC may stay trapped in its falling knife trajectory, with the subsequent potential draw back targets at historic help ranges contained in the 0.020-0.016 BTC vary.

ETH/BTC two-week value chart. Supply: TradingView

The bottom level of this vary is roughly 30% under the present value ranges.

ETH/BTC fundamentals help a bearish outlook

Ether’s prospects of declining additional in opposition to Bitcoin are rooted in components past technical evaluation.

As an example, Ethereum at the moment faces robust competitors from rival layer-1 blockchains, particularly Solana (SOL).

Associated: ‘The worst factor that occurred to Ethereum’ — Bitcoin up 160% because the Merge

VanEck famous that Solana’s decentralized change quantity has surpassed Ethereum’s even throughout a steep dropoff in memecoin buying and selling exercise. In the meantime, Solana’s quantity has risen constantly in current months, which coincides with a decline in Ethereum’s volumes.

Solana vs. Ethereum DEX volumes. Supply: VanEck

Moreover, the launch of spot Bitcoin ETFs has essentially altered the standard crypto market cycle that used to profit Ethereum and different altcoins.

Traditionally, after Bitcoin surged post-halving, capital rotated into altcoins, triggering an “altseason” the place ETH and different property outperformed BTC. Nonetheless, the $129 billion inflows into Bitcoin ETFs in 2024 have disrupted this cycle, draining liquidity from the broader altcoin market—together with Ethereum.

Bitcoin Dominance Index weekly value chart. Supply: TradingView

One other issue is Ethereum-specific promoting strain.

The current Bybit hack reportedly led to substantial ETH liquidations, with a few of that worth laundered by way of decentralized platforms like Thorchain. This absorbed sell-off should be rippling by way of the market, miserable ETH’s relative worth.

This text doesn’t comprise funding recommendation or suggestions. Each funding and buying and selling transfer entails threat, and readers ought to conduct their very own analysis when making a choice.