Following the approval of spot Ethereum exchange-traded funds (ETFs), Ether (ETH) surged to $3,972 before experiencing a 10% decline over the past week, contrasting with Bitcoin’s performance and the wider cryptocurrency market. This has led traders to question whether the altcoin’s downward trend has come to an end.
During the same period, Bitcoin’s (BTC) price fell by 6%, while the overall cryptocurrency market capitalization decreased by 5.3%. Market and technical indicators suggest that ETH may undergo a deeper correction before attempting a recovery.
Over the last week, the ETH/BTC ratio has been on a downward trend, showing Ether’s 10% decline compared to Bitcoin and other major layer 1 tokens. The ETH/BTC ratio dropped from 0.055 on June 3 to 0.0513 on June 11, its lowest level since May 20.
Several factors have contributed to ETH’s underperformance, including Bitcoin-specific events in 2024. The success of U.S. spot Bitcoin ETFs, significant capital inflows, and the upcoming CPI reading and FOMC meeting decision on rate cuts have influenced the market correction affecting all cryptocurrencies, including Ether.
Furthermore, there has been a decrease in Ethereum’s network activity over the past 90 days. Data from Glassnode shows a decline in daily active addresses on the Ethereum network from 622,963 on March 20 to 458,400 on June 10, with a 1.2% drop in the last 48 hours alone.
Despite being a leading network in the layer 1 sector, Ethereum has seen a decline in its market share compared to Solana in terms of on-chain activity. Ethereum’s NFT volume has decreased by 9% over the last seven days, while the number of unique active wallets (UAWs) interacting with the protocol has decreased by 4.5% to 524,000 million.
The diminishing on-chain activity indicates a reduced demand for Ether within the ecosystem, which is impacting its price negatively. The resistance around the $3,500 demand zone has proven to be a significant hurdle for ETH bulls, with a drop below this level leading to a 25% decline in the past.
If sellers continue to dominate the market at this resistance level, Ether’s price is likely to experience further downward pressure. Despite a recent recovery, a bearish candlestick pattern on the daily chart suggests a continuation of the downtrend.
Ether bulls are relying on support at the $3,400 psychological level, and a close below this would signal a potential decline to $2,840, marking an 18% decrease from the current price. This article does not provide investment advice, and readers are advised to conduct their own research before making any financial decisions.