Ethereum remains resilient as of this writing but continues to lag behind Bitcoin. Although ETH is currently trading above $2,400 and might even surpass $3,000 in the forthcoming years, the rapid appreciation of Bitcoin, the world’s leading cryptocurrency, could result in the ETH/BTC ratio reaching multi-month lows.
ETH’s Struggles Against Bitcoin: ETH/BTC Ratio Hits 40-Month Low
As of September 20, data from IntoTheBlock indicates that ETH is trading at its lowest level against Bitcoin in over 40 months. This trend underscores a market that, despite institutional participation, remains bullish on BTC.
Notably, ETH has underperformed even after the approval of spot Ethereum ETFs for trading in July 2024. This approval of complex financial instruments has enabled institutions to gain exposure to Ethereum within a legal framework without incurring exorbitant costs.
Previously, U.S. institutions wishing to acquire ETH were restricted to purchasing Grayscale ETHE shares, which came with higher fees amid uncertainty over ETH’s regulatory status. However, the approval of spot Ethereum ETFs, which prohibits issuers from staking the coins purchased on behalf of clients, was perceived as a significant advancement.
While the U.S. Securities and Exchange Commission (SEC) has not yet formally classified ETH as a commodity like Bitcoin, the Commodity Futures Trading Commission (CFTC) has consistently asserted that ETH does fall under this category.
With ETH declining in relation to BTC, analysts from IntoTheBlock believe that institutional investors are optimistic about Bitcoin’s future. They specifically highlight Bitcoin’s relative stability compared to Ethereum, which carries a more volatile risk-reward profile.
Can Ethereum Find Support?
Amid these insights, it’s important to recognize that Bitcoin continues to serve as a transactional layer, benefiting from its first-mover advantage. Conversely, Ethereum, as the pioneering platform for smart contracts, hosts a range of innovations including DeFi, NFTs, and is now at the forefront of tokenization.
Earlier, BlackRock CEO Larry Fink stated that the tokenization of real-world assets (RWAs), predominantly occurring on Ethereum, is projected to reach a trillion-dollar market cap. BlackRock has also issued BUIDL, a product dedicated to tokenizing U.S. Treasuries, on the Ethereum platform.
The question remains whether ETH will rebound against BTC. Analyzing the daily chart indicates that there might be a shift in trend in the near term. The double-bar bullish pattern observed on September 18 and 19 has been confirmed today.
Furthermore, ETH appears to be gaining strength, reversing direction from the 61.8% Fibonacci retracement level of the trading range observed between 2020 and 2021.
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