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Ethereum broke a support level it has been holding on the ETH/BTC chart since November 2021. Ethereum, the world’s second largest cryptocurrency by market cap, has fallen more than 20% against Bitcoin since its December peak.
Source: TradingView
fear of the merger
Ahead of The Merge, scheduled for August this year, Ethereum has fallen to its lowest level this year relative to Bitcoin. The chart above shows Ethereum falling to just 0.06 BTC per coin after breaking the 0.065 support.
Although it has already rallied 4% from its intraday low, the drop could indicate concern about what will become of the chain after it moves to proof of stake. As some investors comment, participation in the Ethereum network is declining, with many key KPIs showing bearish signals.
“Active wallets are stagnant
NFT hype dead
LP trade volumes are performing poorly
Liquidity loss in stables
L2 cannibalization growing”
Soundwise’s TaschaLabs even went so far as to say, “Will Eth outperform newer L1s that survive the winter?” Probably not.” CryptoSlate Edge members can view data in our Assets section to review the decline in Ethereum usage, including an overwhelmingly bearish indicator in the futures markets.
The uncertainty surrounding global market conditions and the upcoming merger is sure to put some investors off. At the current price, only 53% of Ethereum holders are making profits, with over 60% of investors holding longer than 18 months. The drop in profitable trades further underscores the depth of the downtrend in the crypto markets as a whole.
However, prominent trader CoinMamba argued the other way around
“Metrics change with cycles. They were also in decline in 2018-2019 before a larger growth. Predictions based on today’s numbers are not the right way to make valuations in crypto.”
Edge members can also see that Thursday saw a local peak of positive sentiment towards Ethereum on social media.
Source: CryptoSlate Edge
Layer 1 competitors are gaining market share
In volatile market conditions, access to multiple sources of information and metrics of value is an essential tool for investors targeting short- to medium-term time horizons. However, the current sentiment for Ethereum does not match its price action.
Ethereum dominance hit its lowest level since March, while Bitcoin dominance is up 10% since May. To fuel the debate over Ethereum’s position as Bitcoin’s most prominent competitor, Binance Coin’s dominance surged 20% in May. Binance Coin is also up 15% against Bitcoin over a similar period.
Concerns about The Merge are clear. The blockchain upgrade is arguably the most significant change in crypto history and one that has been anticipated for years. The change will be Ethereum’s biggest test yet, and all eyes are on how layer-1 will fear once mainnet goes live.
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