Ethereum Price Drops 44% Against Bitcoin – Crash Below $2,000 Looming?

Ethereum (ETH) is under heavy selling pressure, causing unrest among investors after a recent price drop of almost 25 percent. Three days ago, the price even hit a yearly low of $2,170, causing a wave of uncertainty.

These are tough times for Ethereum investors, especially since ETH has lost a whopping 44 percent of its value against Bitcoin since the September 2022 Merge. How did it get to this point, and what does it mean for the future of Ethereum?

Ethereum continues to fall against Bitcoin

Ethereum’s continued weakness against Bitcoin has many wondering. A recent report from CryptoQuant points to several factors contributing to this underperformance.

First, institutional investors’ interest in Ethereum has been waning, which is evident in the underperformance of Ethereum ETFs compared to Bitcoin. This has contributed to the drop in the value of the ETH/BTC pair, which now stands at 0.0425 BTC, the lowest level since April 2021.

In addition, Ethereum is struggling with a significant drop in network activity. Both transaction fees and the number of processed transactions have fallen sharply. Where Ethereum achieved 27 transactions per second in June 2021, this number is now only 11.

Finally, the total supply of Ethereum has continued to grow, reducing scarcity and putting additional downward pressure on the price. Since April, the supply has risen to 120.323 million ETH, the highest level since May 2023.

Investors choose BTC

Another major factor contributing to Ethereum’s weakness against Bitcoin is the decline in trading volume. The relative volume between ETH and BTC has dropped from 1.6 to 0.76 over the past week.

Historically, Ethereum’s price tends to only rise when trading volume exceeds Bitcoin’s, which is not the case at the moment. In these uncertain times, investors are therefore clearly favoring Bitcoin over Ethereum.

Ethereum price recovers slightly, but risk of further decline remains

Currently, the price of Ethereum is fluctuating around $2,300, slightly higher than the day before. However, to get the market back in their favor, buyers will have to take action. A crucial level to break through is between $2,600 and $2,700. If this does not succeed, a further drop below $2,000 is certainly not excluded.

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