Ethereum (ETH) has been on a downward trend, falling 23% and hitting its lowest point for the year at $2,200. One big reason for this is that Ethereum has been underperforming compared to Bitcoin since September 2022, losing 44% of its value against Bitcoin. This has left investors wondering why Ethereum is struggling.
What’s Holding Ethereum Back?
A recent report from CryptoQuant points to several factors that might be contributing to Ethereum’s struggles:
- Decreasing Network Activity: Ethereum’s total transaction fees have been declining, likely due to lower fees after the Dencun upgrade. The number of transactions has also dropped significantly.
- Shrinking Institutional Interest:
Institutional investors seem to be favoring Bitcoin over Ethereum. This is reflected in the declining trading volume of ETH compared to Bitcoin. - Ethereum ETFs Lagging Behind: Ethereum exchange-traded funds (ETFs) haven’t performed as well as Bitcoin ETFs, further contributing to the preference for Bitcoin.
Ethereum’s Price Outlook
Ethereum is currently trading at around $2,262. It’s important to watch its price action closely:
- Bullish Scenario: If Ethereum can break above its 4-hour 200 moving average (currently at $2,565), it could signal a return to bullish momentum and potentially challenge the recent highs around $2,600.
- Bearish Scenario: If Ethereum fails to hold its yearly low of $2,200, it could enter a deeper correction phase, potentially leading to a bear market. This level is crucial for short-term recovery, and losing it could trigger more selling pressure.
Overall, Ethereum faces several challenges, and its future performance will depend on whether it can overcome these obstacles. It’s crucial for bulls to regain control and push Ethereum back above key resistance levels to prevent a prolonged downward trend.
