Highlights:
- Ethereum trading between the $2721.2 resistance and $2505.9 support
- The uptrend will only be confirmed if the $2721.2 resistance is broken
- A rally through $2721.2 could pave the way for a retest of all-time highs
Ethereum has been in the green over the last 24 hours, mirroring the price action in the broader cryptocurrency market. At the time of going to press, Ethereum was trading at $2686.56, up by 1.95% in the day. Volumes are also on the rise, up by 1.55% to stand at $21.60 billion.
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Despite the rising price, Ethereum continues to lag Bitcoin in its price action. It also continues to lag behind many top altcoins, some of which have gone on to make new highs in the year. This has led many investors and analysts to start questioning whether Ethereum is dying and whether it is worth holding through this cycle.
Ethereum Continually Underperforming Bitcoin
Such concerns are not basis, and may not be FUD per se. For context, Bitcoin has so far hit $70k four times, and for each of them, the price of Ethereum has been going lower. In the first instance when Bitcoin hit $70k, Ethereum was trading at $4k.
$BTC 1st time 70K, $ETH was at 4K$BTC 2nd time 70K, $ETH was at 3.7K$BTC 3rd time 70K, $ETH was at 3.3K$BTC 4th time 70K, $ETH is at 2.6K
What's wrong going on with #ETHEREUM ?🤨 pic.twitter.com/35M8W9Jp32
— Ajay Kashyap (@EverythingAjay) October 29, 2024
The second time, Ethereum’s price was at $3,700. The third time, Ethereum was at $3,300, and in the present scenario, Ethereum is trading at $2600. This goes to show that while Bitcoin is gaining in value, Ethereum is continuously losing value.
3-Day Price Action Points to Inherent Ethereum Price Weakness
Besides the ongoing underperformance against Bitcoin, Ethereum’s price action in the past 3-days is not inspiring either. In this period, Bitcoin rallied through resistance and tested $73k. In the same period, many top altcoins have rallied by 10% and higher, some even going up by over 25%.
Ethereum is still stuck in a range between the $2721.2 resistance and $2505.9 support. This means Ethereum bulls are yet to gain enough control of the market to push Ethereum to new highs. Such low momentum at a time when the market is sending bullish signals could point to underlying weakness in Ethereum.
Ethereum Being Overtaken By Other L1s
There is also the fact that other layer ones continue to outperform Ethereum in terms of usage and fees earned. For instance, Solana now regularly outperforms Ethereum not just in terms of daily active addresses but also in terms of the fees generated from activities. It goes to show that Ethereum’s once unbreakable dominance in the Layer-1 market is being taken away by competitors.
Ethereum ETFs Hit with Outflows as More Money Flows Into Bitcoin
To make matters worse for Ethereum, it is experiencing ETF outflows at a time when Bitcoin ETFs are experiencing a surge in inflows. This goes to show that while institutional money is increasingly bullish on Bitcoin, they do not hold the same views on Ethereum. It is a factor that cements the perception that Ethereum is currently weak, and could end up lagging the market in this cycle.
So, Which Way for Ethereum?
How Ethereum trades going forward can be deciphered from its price charts. On the one-day chart, Ethereum is range-bound between the $2721.2 resistance and $2505.9 support.
If bulls take control and push Ethereum through the $2721.2 resistance, then Ethereum could easily rally to $3000 or higher in the short term. Such a rally could also inspire confidence among investors that Ethereum is back and could open the way for a rally to its all-time high of $4800.
On the other hand, if bears take control and push Ethereum through the $2505.9 support, it could confirm that Ethereum indeed has an inherent weakness at this point. This could open the way for a significant correction that could easily see Ethereum drop to prices below $2000 in the short term.
Recap – Ethereum Investors Need to Wait for Price Clarity
With the weakness Ethereum is displaying in a rising market, the best option would be to wait for a clear breakout from the current range. Only through a breakout would Ethereum confirm its potential price direction in the short to medium term.
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