If popular analyst Benjamin Cowen is to be believed, Ethereum could be about to “capitulate” against Bitcoin. Simply put, this means that he expects a sharp drop in Ethereum in his trading pair with Bitcoin. But why is Cowen bearish on Ethereum and specifically against Bitcoin?
Ethereum versus Bitcoin
In a new update on YouTube, Cowen shares with his 800,000+ subscribers that Ethereum could be in trouble if the Federal Reserve cuts rates in September; provided the trading pair follows the same price path as it did during the 2016 market cycle.
“What is very interesting about 2016 when you look at the chart is that back then the lows were hit in June, whereas this time it happened in May; about a month earlier,” the analyst said on the chart below.
It may seem like a bit of a blur in the chart above, but since Ethereum’s massive spike during the 2017/2018 bull run against Bitcoin, the coin has mostly been in a downtrend.
Ultimately, it remains to be seen whether this downward trend can ever be turned into an upward trend. For now, Bitcoin is outperforming Ethereum over the long term, which makes sense when you look at the utility of the financial assets.
Bitcoin has “proven” itself as a store of value, while Ethereum is still looking for a good application.
What will Ethereum do?
It is difficult to predict what we can expect from Ethereum in the coming period. Today, the Ethereum ETFs are launching in the United States.
These could theoretically boost the asset, but of course still do not provide a valuable use case. For Ethereum, it is to be hoped that the funds that parties like BlackRock are now launching on the blockchain prove to be a success.
However, for this to happen, they must prove to be a valuable addition to existing funds. One advantage they have is that they are tradable 24/7 in principle, but in terms of efficiency, there are few advantages to be found.
After all, transactions on Ethereum are expensive and can be extremely costly, especially in times of stress. In that respect, the underlying technology does not seem to be built for huge amounts of transactions.
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Source: https://newsbit.nl/analist-ethereum-gaat-dalen-ten-opzichte-van-bitcoin/
