Ethereum Breaks Support That Once Prompted a 1,800% Rebound
In recent times, the native token of Ethereum, Ether (ETH), has slipped below its longest-serving support level against Bitcoin (BTC). This development has led top analysts to conclude that it is "dying a slow death."
The Ascending Trendline Support Breakdown
Notably, the ETH/BTC pair broke below the ascending trendline support that has coincided with Ethereum’s market bottoms since 2016. This includes the pair’s 300% rebound between December 2020 and December 2021 and a 1,800% recovery between January 2017 and May 2017.
Losing Support Amid Increasing Trading Activity
However, in November 2024, Ethereum bulls could not defend the support level. The ETH/BTC pair dropped by around 15% below it, accompanied by a rise in trading volumes. In technical analysis, losing a support level—especially amid increasing trading activity—indicates strong selling pressure, meaning ETH/BTC may decline further in the coming weeks.
"Ethereum is Dying a Slow Death"
Tuur Demeester, founder of Bitcoin hedge fund Adamant Capital, commented on this development: "Ethereum is dying a slow death."
Contributing Factors to Ethereum’s Underperformance
In 2024, ETH/BTC has underperformed largely due to the launch of spot Bitcoin exchange-traded funds (ETF) in the United States and the underperformance of its own spot Ethereum ETF. This, combined with Bitcoin’s fourth halving in April, increased BTC’s appeal among retail and institutional investors, resulting in a capital shift away from Ethereum and into Bitcoin.
Ethereum also suffered due to the growing adoption of its top smart contracts rival, Solana (SOL). SOL/ETH has surged by over 925% since December 2022.
Ethereum Missed Key Headlines During the Donald Trump Election Campaign
Ethereum also missed key headlines during the Donald Trump election campaign, wherein he flirted with the idea of making Bitcoin a strategic reserve asset in the US, ignoring Ethereum.
These factors have resulted in strong declines in Ethereum’s crypto market dominance (ETH.D), now at its lowest since April 2021.
ETH Price Could Drop Another 50%
Chart technicals show ETH/BTC entering the breakdown stage of its prevailing inverse cup-and-handle (IC&H) pattern. This is confirmed by a rounded top that signals the loss of momentum in an uptrend, followed by a smaller upward consolidation, representing a temporary pause or consolidation before resuming a downward move.
Breakdown Scenario for ETH/BTC
An IC&H pattern resolves after the price breaks below their common neckline support and drops by as much as the distance between the cup’s peak and neckline. Applying this breakdown scenario in ETH/BTC’s case brings the downside target for 2024 to 0.017 BTC, a key support level from the August 2019-January 2020 period.
That is down 50% from today’s prices.
Conversely, a strong rebound from the current support level of around 0.0317 BTC—coinciding with the 0.786 Fib line—could invalidate the IC&H pattern, sending the pair toward 0.043 BTC next by 2024’s end.
Conclusion
In conclusion, Ethereum’s native token, Ether, has slipped below its longest-serving support level against Bitcoin. This development has led top analysts to conclude that it is "dying a slow death." The contributing factors to Ethereum’s underperformance include the launch of spot Bitcoin ETFs in the United States and the growing adoption of Solana.
It remains to be seen whether Ethereum will rebound from this development or continue its downward trend.
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