Ethereum is strong as of writing but continues to underperform against Bitcoin. While ETH is floating above $2,400, and may even break above $3,000 in the coming years, the rapid strengthening of the world’s most valuable coin, on the other hand, could push the ETH/BTC ratio to multi-month lows.
ETH Struggles Versus Bitcoin, ETH/BTC Rate Hits 40-Month Low
As of September 20, IntoTheBlock data revealed that ETH is trading at its lowest level against Bitcoin in more than 40 months. This trend clearly shows that the market, even including institutions, is bullish on BTC.
Interestingly, ETH continues to underperform despite the approval of Ethereum ETFs to trade in July 2024. The approval of these complex derivatives allowed institutions to gain exposure to the second most important letter within legal limits while not breaking the bank as they did.
Previously, institutions in the United States that wanted to buy ETH could only do so by buying Grayscale ETHE shares. The problem is that the fees were high when the financial world did not know the regulatory status of ETH. Although nothing has changed, Ethereum’s approval of Ethereum, which prevents issuers from mining coins purchased by customers, was seen as a win.
The United States Securities and Exchange Commission (SEC) has yet to issue an official statement endorsing ETH as an asset similar to Bitcoin. However, the Commodity Futures Trading Commission (SEC) has repeatedly stated that ETH is a commodity.
With ETH sliding against BTC, IntoTheBlock analysts are confident that institutional investors are confident about Bitcoin’s prospects. Specifically, they point to the relative stability of Bitcoin compared to Ethereum, an asset with a high risk-reward profile.
Will Ethereum get support?
Even with this assessment, it should be noted that Bitcoin remains in the transaction layer, riding on its first mover advantage. On the other hand, Ethereum is the first platform for smart contracts, and hosts various innovations from DeFi, NFTs, and now driving tokens.
Earlier, Larry Fink, CEO of BlackRock, said that the real world asset (RWA) token, most of which is generated in Ethereum, will rise to control a trillion in market capitalization. BlackRock has released BUIDL, a product that mirrors United States Treasuries, on Ethereum.
It remains to be seen whether ETH will recover against BTC. Looking at the daily chart, the trend seems to be changing, at least in the immediate term. The double-bar bullish formation for September 18 and 19 is confirmed today.
At the same time, ETH seems to be strengthening, turning the corner from the 61.8% Fibonacci retracement level of the 2020 to 2021 trading range.