The price of Ether (ETH), the native token of Ethereum, has reached a 15-month low against Bitcoin (BTC). This is the lowest point for Ethereum since it switched to proof-of-stake (PoS). Many investors are now wondering if the weakness will continue throughout the remainder of 2023.
Looking at the charts, we can see that the ETH/BTC pair dropped to 0.056 BTC earlier this week. This drop caused the pair to break below its 200-week exponential moving average (EMA), which had historically served as a reliable support level for ETH/BTC bulls. For example, the pair rebounded 75% three months after testing the support in July 2022. Conversely, it dropped over 25% after losing the same support in October 2020.
The break below the 200-week EMA raises downside risks for ETH/BTC in 2023. The next downside target appears to be around the 0.5 Fibonacci line near 0.051 BTC, which is approximately 9.5% lower than the current price levels. However, if ETH can reclaim the 200-week EMA as support, it may rebound towards its 50-week EMA near 0.065 BTC.
The weakness of Ethereum compared to Bitcoin is also reflected in institutional capital flow data. Bitcoin-specific investment funds have attracted $246 million year-to-date, while Ethereum funds have experienced outflows worth $104 million in the same period. This discrepancy is likely due to growing buzz about a potential Bitcoin exchange-traded product (ETF) approval in the US.
Trade pundits argue that a spot Bitcoin ETF launch could attract $600 billion. Additionally, Bitcoin’s fourth halving, which is planned for April 24, 2024, is acting as a tailwind for Bitcoin over the altcoin market. The halving will reduce the block reward for Bitcoin miners from 6.25 BTC to 3.125 BTC, which historically has been a bullish factor as it cuts the new supply in half.
It’s important to note that this article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers should conduct their own research before making any decisions.