A recent spike in the price of Ether (ETH) versus its main competitor Bitcoin (BTC) appears to be in danger of being used up, even if analysts see the second largest cryptocurrency as the strongest of the two.
In retrospect, The ETH / BTC pair rose as high as 40.19% after bottoming out at 0.0553 BTC on May 23. The strong rebound movement reflected an increase in the flow of capital from the ETH spot market to the BTC spot market, which analysts at Delphi Digital, an independent market research company, Highlighting the “tremendous strength” of Ethereum in the Bitcoin traded marketsThey write:
“If you looked at the YTD ETH / BTC chart in isolation, you probably wouldn’t suspect that the fear in the crypto market is the highest in a year.”
However, a closer look at the ETH / BTC chart revealed indications that bullish traders could fall into a bullish trap.
The ETH / BTC pair formed a pattern that started low down and contracted as the price increasedAs a result, the trading margin narrowed while volumes decreased as prices rose and trading patterns changed.
Classical Chartists refer to the structure as a rising wedge.They interpret it as a traditional bearish reversal pattern, mainly due to the loss of bullish momentum in each consecutive high formation.
Rising wedges ripen when the asset reaches the level where its two trendlines convergeBearish confirmations, however, only come when the price convincingly breaks below the wedge support. the asset risks collapsing to the maximum distance between the top and bottom trend lines of the wedge.
Hence, the rising wedge indicator on the ETH / BTC pair points to a decline towards 0.0648 BTC on an attempted negative breakout from the top of the pattern., the point where the trendlines converge, and the 0.0648 BTC level served as a support at the May 2021 session.
Fractal January 2018
Delphi Digital compared the ETH / BTC pair’s reactions to Bitcoin’s cyclical highs in 2018 and 2021 to explain its bullish outlook for the pair.
The company emphasized that ETH / BTC was a comparatively weaker instrument during the 2017 price rally than in 2021. The pair broke the middle of the cycle in June 2017, although Bitcoin continued to climb, reaching $ 20,000 by the end of the year. By then, ETH / BTC had slumped by more than 85%.
But a massive correction in Bitcoin prices in January 2018 allowed capital to flow into the altcoin markets, causing a short-term upward correction in BTC-enabled pairs.Ether also benefited from the Bitcoin markets’ cash flow as it rose from 0.0231 BTC in December 2017 to 0.1237 BTC in January 2018, an increase of 435.44%.
The ETH / BTC pair then began correcting downward in the weekly sessions, as both Bitcoin and Ethereum were beaten in the dollar traded marketsThe pair eventually fell from 0.1237 BTC, then an annual high, to a low of 0.0246 BTC in December 2018.
But that’s not the case with the current ETH / BTC correction.Delphi Digital noted and wrote:
“At the beginning of 2018, ETH / BTC was severely beaten and did not recover as quickly as this time.”
Whether or not the ETH / BTC pair would have a negative breakout seems to depend on how Bitcoin performs in dollar-traded markets.
The BTC / USD pair fell to 53.77% from its all-time high of $ 65,000 and later began to consolidate.Meanwhile, the ETH / USD rate also corrected along with BTC / USD, falling 60.59% from its all-time high of $ 4,384. That showed a strong linear correlation between the two digital assets.
Nick spanos, Founder of the Bitcoin Center NYC, told Cointelegraph that ether would need to break out of its correlation with Bitcoin in dollar-denominated markets in order to have an independent ETH / BTC trend.Until then, strong downward movements in the ETH / USD and BTC / USD pairs would also mean a downward trend in ETH / BTC.
“Although Ethereum has good fundamentals and ongoing updates, its potential growth in the future depends to some extent on the performance of Bitcoin. Investors in Ethereum are forecasting a breakout from this trend. However, the current trend does not indicate the likelihood of this at all. ” short or medium term. “
Yuri Mazur, Head of the data analysis department of the cryptocurrency exchange CEX.IO, added that the ongoing anti-inflation narrative could allow Bitcoin to resume its uptrendAs a result, the rest of the cryptocurrency market, including Ethereum, should follow suit, he told CoinTelegraph:
“The ETH / BTC pair should benefit from an uptrend in cryptocurrencies, especially as Ethereum goes through the London hard fork update in late July.”