Why is ETH / BTC showing weakness?

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The price of Ether (ETH), the native cryptocurrency of Ethereum, has stagnated in the last few days after a few strong weeks against BTC versus Bitcoin.

In the past few weeks, ETH and BTC have shown an inverse correlation as ETH rebounded sharply on consolidating BTC and vice versa.

15-minute price chart of ETH / BTC (Binance). Source: TradingView.com

Why is ETH fighting at the moment?

Bitcoin has seen a decent rally in the past few hours after BNY Mellon announced it would offer Bitcoin services later this year.

Roman Regelman, CEO of BNY Mellons Asset Service and Digital, said:

“BNY Mellon is proud to be the first global bank to announce plans for an integrated service for digital assets. The growing customer demand for digital assets, the maturity of advanced solutions and the improvement in regulatory clarity offer us a tremendous opportunity to expand our current service offering into this emerging area. “

The announcement added momentum to Bitcoin almost immediately, causing it to rally from around $ 45,500 to around $ 47,400. It eventually hit an all-time high hours later, rising to over $ 48,500.

Over the same period, the ETH / BTC pair pulled back, although the respective USD stayed in relative lockstep. In recent weeks, however, ETH has generally recovered more strongly than Bitcoin in uptrends, alongside large-cap altcoins and DeFi tokens.

BTC / USD vs. ETH / USD (orange) 1-hour candle chart (Bitstamp). Source: trade view

However, in the past 24 hours, when Bitcoin gained significant momentum in the short term, ETH lagged behind BTC.

Willy Woo, a popular on-chain analyst, said that Bitcoin is historically a better “multi-cycle HODL” while ETH is a “better mid-macro” swing trade.

This trend is also evident in short-term cycles, as Bitcoin is steadily increasing for most of the time, while ETH is either accelerating or stagnating against BTC. He said:

“Risk-adjusted returns over a holding period of 4 years. -> Winner: Tie. Do you see how short the ETH trace back is? That shows how new and untested it is, only 1 macro cycle of data so far. Gold was also evident (6000 years of backtrace, supply inflation of 100% per 40 years, not digital). Personal opinion from this data: – BTC is a better multi-cycle HODL. – ETH is a better mid macro swing trade. “

What’s next for Ethereum?

In the short term, traders and analysts remain generally optimistic about the short-term cycle of ETH.

ETH, BTC performance since the beginning of the year. Source: Digital Assets Data

For example, there was no sell-the-news reaction to the CME ETH futures listing, which is a positive factor that could increase the chances of the ETH rally continuing.

In addition, the CME ETH derivatives market traded with a volume of over USD 30 million on the first trading day, which is relatively high for the first trading day. So if institutional demand for ETH increases in late 2020, similar to Bitcoin, ETH could see a wider rally in the coming weeks.

A trader known as “Pentoshi” said Altcoins and ETH should have much stronger momentum, suggesting they are currently stagnating. He said:

“The old market made me a little unsure that $ ETH and $ LINK should have a lot more momentum. DeFi Perp shows indecision. Total may find resistance here at 500B. Something to watch and plan. DO NOT BE AFRAID. Every correction is an opportunity. See it that way. “

Currently, $ 1,800 remains the key level to break ETH and regain momentum against Bitcoin and the US dollar in the foreseeable future.