Ethereum Faces Record Downside as ETH/BTC Hits 4-Year Low, Bearish Pattern Signals Further Decline

Ethereum’s price continues to slide, hitting its lowest level against Bitcoin in over four years. The ETH/BTC pair has plummeted to 0.019, a staggering drop of over 80% from its peak in December 2021. This marks a continuation of a painful three-week losing streak, with Ethereum now hovering at levels unseen since January 2020.

From a broader perspective, Ethereum has seen a significant decline from last year’s highs of $4,000, falling below the $1,500 mark. Additionally, its market cap dominance has dwindled by 67% from its 2021 peak and is fast approaching levels seen in 2022.

The downward spiral began after Ethereum’s The Merge upgrade in September 2022, which transitioned the network to a proof-of-stake consensus model. While this upgrade was designed to improve scalability and sustainability, Ethereum has faced increasing headwinds. Spot Ethereum ETFs have largely failed to catch on with investors, with just under $2.6 billion in cumulative inflows. This is a stark contrast to the $85 billion held in Ethereum investment funds, suggesting that many still favor Bitcoin as a preferred store of value.

Ethereum is also grappling with heightened competition from its Layer-2 solutions. Networks like Base, Arbitrum, Polygon, and Optimism have made significant inroads. While Ethereum’s DEXs processed $57.9 billion in volume over the last 30 days, Layer-2s handled a respectable $35 billion, showcasing the growing shift to more scalable alternatives.

Furthermore, Ethereum’s profitability is waning. The network’s fee revenue lags behind competitors such as Tron, Solana, and Jito, further diminishing its appeal.

ETH Could Fall to Record Lows

Ethereum’s technical indicators reinforce the bearish outlook. A death cross — where the 50-week and 200-week moving averages intersect — formed in May 2024, confirming a longer-term bearish trend.

Recently, Ethereum has formed an inverse cup and handle pattern, a bearish continuation signal that suggests further downside. This pattern typically sees a rounded top followed by a horizontal support level, indicating that ETH might continue its decline. The Average Directional Index (ADX) has risen to 44, signaling that the downtrend is gaining momentum.

If the current pattern holds, projections suggest that the ETH/BTC pair could plummet to 0.0025, which would bring it dangerously close to an all-time low. The road ahead could be challenging for Ethereum, with its price potentially continuing its downward trajectory unless major shifts occur in the broader market sentiment or within the network itself.