Ethereum’s native token, Ether (ETH), has recently experienced a drastic decline, reaching multi-year lows against Bitcoin (BTC). This development has prompted analysts to issue warnings about potential further declines in the coming weeks.
Falling Knife Warning and Sell-Off Risks
As of March 13, the ETH/BTC pair, which tracks Ether’s strength relative to Bitcoin, plunged over 1.50% to $0.022, marking its lowest level since May 2020. This decline is part of a broader downtrend that began following its record high of $0.156 in June 2017, with ETH seeing a staggering decrease of more than 85% since then.
On the two-week ETH/BTC chart, the Relative Strength Index (RSI)—a popular momentum indicator—has dropped to a record low of 23.32. Typically, an RSI under 30 suggests an asset is oversold, potentially indicating a price rebound. However, Ethereum’s RSI has continued to decline, signaling that the downtrend may be accelerating rather than stabilizing.
Crypto analyst Alessandro Ottaviani has aptly described this situation as a “falling knife” scenario, indicating that attempting to buy ETH at this perceived low could lead to further losses if the downward trend persists.
Traders are closely monitoring for RSI stabilization and recovery of key resistance levels to signal a potential reversal, ideally beginning with a bounce from the $0.022 BTC level. Such a rebound previously limited ETH/BTC’s downside attempts in December 2020, culminating in a 300% rally.
ETH/BTC weekly price chart. Source: TradingView
If ETH manages to rebound, the ETH/BTC pair could target the 0.382 Fibonacci retracement level around 0.038 BTC, coinciding with the 50-week exponential moving average. Until then, the technical outlook suggests ETH/BTC may continue its descent, with potential price targets within the 0.020-0.016 BTC historical support range—about 30% lower than current levels.
Fundamentals Supporting a Bearish Outlook
Beyond technical analysis, several fundamental factors contribute to Ether’s bearish outlook against Bitcoin. Ethereum faces intense competition from other layer-1 blockchains, particularly Solana (SOL). Recent data from VanEck indicates that Solana’s decentralized exchange volume has eclipsed Ethereum’s, even during market downturns associated with memecoin trading activities.
Moreover, the recent introduction of spot Bitcoin ETFs has fundamentally altered the crypto market landscape. Traditionally, following a Bitcoin surge post-halving, capital would rotate into altcoins, initiating an “altseason” where assets like ETH would outperform BTC. However, with approximately $129 billion flowing into Bitcoin ETFs throughout 2024, this cycle has been disrupted, draining liquidity from the broader altcoin market, including Ethereum.
Additionally, Ethereum has been impacted by Ethereum-specific selling pressure. Notably, the recent Bybit hack has led to significant ETH liquidations, with portions of this value laundered via decentralized platforms, suggesting ongoing selling pressure that diminishes ETH’s relative value.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research prior to making decisions.
