The ETH/BTC exchange rate has fallen below 0.023, which hasn’t happened since late December 2020, according to TradingView statistics.
This notable drop indicates a change in Ethereum’s relative performance in relation to Bitcoin.
The decline can be a sign that Bitcoin is outperforming Ethereum at the moment, or it might be a reflection of market sentiment that favors Bitcoin over other altcoins as a result of numerous macroeconomic variables or events unique to the cryptocurrency space.
At the press time, Ethereum is trading at $1,912.85, down 0.07% as compared to the same time last day.
What is The ETH/BTC Ratio Used For?
Traders frequently use the ETH/BTC ratio to assess the relative strength of these two well-known cryptocurrencies; a declining ratio indicates that Ethereum is lagging behind Bitcoin.
Ethereum’s recent network upgrades, such the switch to Ethereum 2.0, may potentially have contributed to this decrease by creating investor apprehension.
Investors and traders will keep a careful eye on the ETH/BTC ratio in order to gain additional understanding of the market’s trajectory.
Ethereum’s Underperformance Hurts Exchange Ratios
There are a number of reasons why Ethereum is currently underperforming, but the main one is the attitude of the market toward its most recent updates.
Since Ethereum 2.0 switches from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus method, there is now ambiguity. Although the goal of this upgrade is to increase energy efficiency and scalability, some investors are worried about possible risks, delays, or implementation difficulties.
Furthermore, in contrast to other blockchain networks, Ethereum’s gas prices and network congestion problems continue to present difficulties despite advancements.
Other Layer-1 platforms that offer lower fees and faster transaction speeds, such as Solana and Avalanche, are also competing with Ethereum.
Ethereum’s performance is also impacted by recent volatility in the larger cryptocurrency market and regulatory uncertainty, which makes traders prefer Bitcoin.
Ethereum’s Short-Term Performance: What To Expect?
A number of market factors are causing considerable unpredictability in Ethereum’s short-term price prediction. At the moment, Ethereum is underperforming in comparison to Bitcoin, and the state of the Ethereum 2.0 upgrade, regulatory worries, and general market mood all affect its price.
Ethereum may see upward price movement soon if its scalability problems are resolved and its improvements are implemented effectively. However, other Layer-1 blockchains like Solana and Avalanche, which provide cheaper costs and quicker transactions, also pose a serious threat to Ethereum.
The price of Ethereum may continue to fluctuate in the near future, with possible support levels ranging from $1,600 to $1,800. Although market conditions will mostly determine its trajectory, a breakout above important resistance levels could indicate a comeback.
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