Home CryptocurrencyBitcoin Ethereum risks another 10% drop against Bitcoin as $15.4 million leaves ETH investment funds

Ethereum risks another 10% drop against Bitcoin as $15.4 million leaves ETH investment funds

by SuperiorInvest

The September 15th Ethereum Merger turned out to be a selling news an event that looks set to continue.

Especially Ether (ETH) fell significantly against the US dollar and Bitcoin (BTC) after Unite. As of September 22, the ETH/USD and ETH/BTC trading pairs are down more than 20% and 17%, respectively, since Ethereum’s transition to Proof-of-Stake (PoS.

Daily price chart of ETH/USD and ETH/BTC. Source: TradingView

What’s eating the Ether bulls?

Multiple catalysts contributed to Ether’s decline over the period. First, the decline in the price of ETH against the dollar appeared in sync with similar declines elsewhere in the crypto market, driven by the Federal Reserve. rate hike of 75 basis points (bps)..

Second, Ethereum faced a lot of flak for becoming too centralized after the merger.

Only five subjects produced 60% blocks so far. The largest share belongs to Lido DAOan Ethereum betting service that has 4.19 million ETH deposited, or more than 30% of the total amount staked in the official Ethereum PoS smart contract.

The total amount of ETH 2.0 staked by the provider. Source: Glassnode

Third, institutional investors, or “smart money,” also reduced exposure to Ethereum-focused investment vehicles in the day before and after the merger.

Ethereum funds saw $15.4 million worth of capital drain from their coffers in the week ending September 16, according to CoinShares Weekly. message. In contrast, bitcoin-based investment funds attracted $17.4 million in the same week, suggesting capital migration following the merger.

Finally, Ether has also felt extreme selling pressure from its proof-of-work (PoW) miners who sold $40 million worth of Ether in the days before the PoS update.

Independent market analyst Tuur Demeester he remarked that Ether could continue to decline against Bitcoin in the coming days, referring to ETH/BTC’s previous reaction to key events in the Ethereum market as shown below.

ETH/BTC price performance around key Ethereum events. Source: TradingView

The chart shows the practice of Ether traders pumping ETH against Bitcoin ahead of adoption related narratives such as non-fungible tokens (NFT) a Defi insanity in 2021 and The ICO boom of 2017.

Once the hype died down, all these gatherings died down. Demeester highlights Ethereum’s move to PoS as a similar phase of the hype that pushed ETH/BTC higher in 2022, expecting the pair to undergo a deep correction in the coming weeks.

“I expect ETH/BTC to violently break apart at some point,” he said, adding:

“ETH is a ticking time bomb.

ETH/BTC technicals suggest 10% decline ahead

Placing these fundamentals against the technicals of Ether versus Bitcoin presents a similarly bearish setup.

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On the 3-day chart, ETH/BTC is down nearly 25% after peaking at 0.085 BTC, a level that coincides with its long-term resistance level of 0.081 BTC.

Now the pair is tracking another decline towards its multi-month uptrend support as shown below.

Three-day ETH/BTC price chart. Source: TradingView

The trendline support is falling in sync with 0.06 BTC, a level that served as a pullback zone in 2022. In other words, another 10% drop is on the table.

The ETH/USD bearish setup is worse

Ether could fall as much as 45% against the dollar due to what appears to be an ascending triangle pattern in a downtrend.

Three-day ETH/USD price chart with an “ascending triangle” pattern. Source: TradingView

A bearish continuation pattern is usually resolved after the price breaks below the lower trend line and then declines to the maximum height. So, the bearish target is near $700 by the end of this year, which is 45% down from today’s price.

Conversely, a pullback from the lower trendline of the triangle could see Ether rise towards the upper trendline, implying a rise towards $1,775 or a 35% gain from current price levels.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Cointelegraph.com. Every investment and trading step involves risk, you should do your own research when making a decision.

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