After rallying to record high: Why is Ethereum stagnating behind Bitcoin?
The price of Ethereum is falling against both Bitcoin and the US dollar. Earlier, the dominant cryptocurrency rose to a new all-time high.
While Bitcoin began to climb towards $49,900, Ethereum’s price fell over the same period.
Although Ethereum (Go to Buy Ethereum Guide) has sometimes lagged Bitcoin Union during a strong BTC uptrend, it is rare for ETH to fall so much when BTC is soaring.
15-minute price chart of Ethereum. Source: ETHUSD on TradingView.com
Why did this Ethereum price trend occur?
Traders say it was most likely a severe fall in the ETH/BTC pair – which collapsed as the price of Bitcoin began to recover.
In recent weeks, the ETH/BTC pair has seen both ETH outperform Bitcoin at times and BTC regain momentum on some days.
On February 14, as Bitcoin hit a new all-time high and took most of the momentum in the cryptocurrency market, major cryptocurrencies plummeted – including Ether.
A crypto trader named “Feras Y” explains:
“With #Bitcoin now leading the way, $ETHBTC usually pulls back. Currently testing the neckline for the proposed iH&S (for months, see thread) I’d like to see the neckline hold for potential 50-100% moves up as explained.”
In the short term, ETH could rally strongly against BTC if Bitcoin breaks cleanly out of the $50,000 resistance area and consolidates above it.
Currently, traders are unsure where Bitcoin is headed in the near term as the $50,000 resistance area acts as a major selling wall (and this chart pattern is causing bulls trouble with Bitcoin). Therefore, a clean break above this level would likely lead ETH to break out of its current price range as well.
Santiment analysts have noted that the number of Ethereum whales has declined over the past month as the price of ETH reached a new all-time high.
This metric can be interpreted in a number of ways. Some might argue that since the whales have sold off, it shows a bearish trend for ETH in the foreseeable future.
However, considering that ETH continues to make new highs, it can be said that the selling pressure from whales is being absorbed by the market.
“#Ethereum’s top 100 whale exchange addresses hold the lowest inventory of $ETH tokens (~11.4M) in 27 months. This number has fallen on the way to $ETH’s new #AllTimeHigh. Watch this inverse correlation between price & stock market whales closely!”
With FX reserves decreasing and stablecoin inflows increasing, ETH is technically in a strong position to see a continuation of the rally.
It remains to be seen if it will see a short-term reversal from its recent slump, but based on its price cycle in February, a rally is more likely than a breakdown from the current range.