Ethereum risks another 10% drop versus Bitcoin as $15.4M exits ETH investment funds

Ethereum’s Merge on Sep. 15 turned out to be a sell-the-news occasion, which seems set to proceed. 

Notably, Ether (ETH) dropped significantly in opposition to the U.S. greenback and Bitcoin (BTC) after the Merge. As of Sept. 22, ETH/USD and ETH/BTC buying and selling pairs had been down by greater than 20% and 17%, respectively, since Ethereum’s change to proof-of-stake (PoS).

ETH/USD and ETH/BTC day by day value chart. Supply: TradingView

What’s consuming Ether bulls?

A number of catalysts contributed to Ether’s declines within the mentioned interval. First, ETH’s value fall in opposition to the greenback appeared in sync with comparable declines elsewhere within the crypto market, pushed by Federal Reserve’s 75 basis points (bps) rate hike.

Second, Ethereum faced a lot of flak for becoming too centralized post-Merge.

Only five entities have produced 60% of the blocks so far. The biggest share belongs to Lido DAO, an Ethereum staking service, that has 4.19 million ETH deposited, or over 30% of the total amount staked into Ethereum’s official PoS smart contract.

ETH 2.0 total value staked by provider. Source: Glassnode

Third, institutional investors, or “smart money,” also reduced exposure to the Ethereum-focused investment vehicles in the day leading up to and after the Merge.

Ethereum funds witnessed $15.4 million worth of capital outflows from their coffers in the week ending Sept. 16, according to CoinShares’ weekly report. In contrast, Bitcoin-based investment funds attracted $17.4 million in the same week, suggesting capital migration post-Merge.

Lastly, Ether also felt extreme selling pressure from its proof-of-work (PoW) miners, who sold $40 million worth of Ether in the days leading up to the PoS update.

Independent market analyst Tuur Demeester noted that Ether may proceed its decline versus Bitcoin within the coming days, citing ETH/BTC’s earlier response to key occasions within the Ethereum market, as proven under.

ETH/BTC value efficiency round key Ethereum occasions. Supply: TradingView

The chart exhibits Ether merchants’ apply of pumping ETH in opposition to Bitcoin forward of adoption-related narratives, resembling nonfungible tokens (NFTs) and the decentralized finance craze of 2021, and the preliminary coin providing ( growth of 2017.

All of those rallies fizzled out as soon as the hype subsided. Demeester highlights Ethereum’s change to PoS as an identical hype section that pushed ETH/BTC greater in 2022, anticipating the pair to endure a deep correction within the coming weeks.

“I anticipate ETH/BTC to interrupt down violently in some unspecified time in the future,” he mentioned, including:

“ETH is a ticking time bomb.”

ETH/BTC technicals trace at 10% drop forward

Inserting these fundamentals in opposition to Ether’s technicals versus Bitcoin presents a equally bearish setup.

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On the three-day chart, ETH/BTC has dropped by nearly 25% after topping out at 0.085 BTC, a level that coincides with its long-serving resistance level of 0.081 BTC.

Now,the pair eyes an additional drop toward its multi-month ascending trendline support, as illustrated below. 

ETH/BTC three-day price chart. Source: TradingView

The trendline support falls in sync with 0.06 BTC, a level that has served as a pullback zone in 2022. In other words, another 10% decline is on the table.

ETH/USD’s bearish setup is worse

Against the dollar, Ether could decline by as much as 45% due to what appears to be an ascending triangle pattern in a downtrend.

ETH/USD three-day price chart featuring ‘ascending triangle’ pattern. Source: TradingView

As a rule, the bearish continuation pattern resolves after the price breaks below its lower trendline and then falls by as much as its maximum height. Hence the bearish target sits near $700 by the end of this year, down 45% from Sept. 2’s price.

Conversely, a pullback from the triangle’s lower trendline could have Ether rise toward the upper trendline, which means a rally toward $1,775, or a 35% gain from current price levels.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.