- ETH’s underperformance has dropped to a multi-year low.
Bitwise’s executive remains confident about ETH’s price reversal.
As a seasoned analyst with years of experience navigating the complex and ever-evolving world of cryptocurrencies, I find myself intrigued by the current state of Ethereum (ETH). Despite its recent underperformance, marked by a drop to a multi-year low in terms of ETH/BTC pair, I remain optimistic about its long-term prospects.
As a cryptocurrency investor, I found myself pondering over Ethereum‘s [ETH] value compared to Bitcoin [BTC] earlier this week. The ETH/BTC ratio dipped below 0.04, marking a significant shift not seen in almost four years. This development sparked some market concerns.
The pair tracks ETH’s valuation relative to BTC, and its multi-year downtrend marked the altcoins’ worrying underperformance.
In fact, ETH has erased its yearly gains. But BTC was up 40%, and Solana [SOL], ETH’s main competitor, was up 18% year-to-date.
ETH’s moment will come…
Despite some current uncertainty, Bitwise’s digital asset manager remained optimistic about Ethereum’s price increase in the future. Matt Hougan, Bitwise’s Chief Investment Officer, made a daring prediction on Ethereum, pointing towards a potential recovery following the U.S. elections.
Part of his recent note to investors read,
It seems to me that individuals tend to underestimate the achievements Ethereum has made in its ecosystem so far, moving past it too hastily.
According to Hougan, Polymarket’s prediction site, the vast stablecoin market, and the Decentralized Finance (DeFi) sector are strong indicators of a bullish trend for altcoins. Additionally, growing institutional interest from BlackRock and others is also favorable for Ethereum’s value.
As an analyst, I expressed that enhanced regulatory transparency within the Decentralized Finance (DeFi) sector could potentially propel the altcoin, particularly following the U.S. elections. I emphasized this point due to its potential implications.
It seems likely that the value of Ethereum could be reassessed as we approach the November elections, especially if any clear regulations emerge. At this point, it appears to be a possible opportunity for going against the trend until the end of the year.
ETH’s current woes
Market pundits have cited several reasons for ETH’s relative poor performance to BTC.
David Duong, Coinbase’s Head of Institutional Research, attributed much of the present subdued pricing trend to the usual market structure characterized by sluggish activity during the summer season, which often results in decreased trading volumes.
Yet, the subpar performance of U.S. exchange-traded funds (ETFs) focused on Ethereum (ETH) has likewise been identified as a contributing factor to the current bearish mood towards Ethereum.
Contrary to Bitcoin ETFs in the U.S., Ethereum-based products have experienced a total outflow of approximately $606 million since their launch in July.
As per Hougan’s analysis, the uncertainty surrounding regulations has been a significant factor affecting ETH, particularly in the lead-up to the U.S. elections when it was unclear who might emerge as the next president.
He added that the community’s concern over ETH’s tokenomics also contributed to its current woes.
In recent times, ETH‘s income has dropped to its lowest point in four years due to the fact that L2s (Layer 2 solutions) have taken the majority of the transaction volume from the main L1 platform. This shift has raised worries among users, as pointed out by Hougan.
Some question whether Ethereum has compromised its core functionality by moving away from its primary Layer 1 blockchain for scalability purposes.
In the meantime, ETH/BTC was on the verge of breaking below its multi-year descending channel.
That said, market analyst Benjamin Cowen projected that ETH/BTC could bottom by the end of the year. At the time of writing, ETH was valued at $2.3K, down 43% from its March highs of $4K.
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2024-09-19 06:16