Ether (ETH), Ethereum’s native cryptocurrency, couldn’t break out again against Bitcoin (BTC) as BTC / USD gained more than 8% on March 18.
There are two likely reasons why the ETH / BTC pair is failing to break through an important level of resistance.
First, BTC rebounded sharply in a brief moment after most of the market was tight for the past few days, outperforming most alternative cryptocurrencies.
Second, the overall macro landscape for the risk-on-market is deteriorating due to the rising 10-year US Treasury yield, which has just hit a 14-month high of 1.75%. This could put more selling pressure on altcoins, which are lower in volume and liquidity overall than BTC.
Despite optimistic key figures in the chain, ETH rejected it at key level
According to the pseudonymous trader known as “Trader XO”, ETH rejected a key level in the ETH / BTC chart.
The trader stressed that ETH needs to stay above the low support area at 0.029 BTC in order for the bullish short-term market structure to remain intact.
If ETH rebounds from lows in the region of around $ 1,720 for the ETH / USD pair, there is a higher chance the rally will continue. He said:
“$ ETH – Rejected from the middle as expected. Ideally, I would like to see the lows hold here. Wouldn’t a deviation of the lows bother me either – would make me more confident to get into #Ethereum and wait patiently for the Structure forms before jumping in. At first more sideways. “
Despite the stagnation of ETH / BTC, analysts say Ethereum’s fundamentals and on-chain data points remain very bullish.
A pseudonymous Ethereum analyst and investor named “DCinvestor” stated that the upcoming EIP-1559 proposal and Proof-of-Staking (PoS) for Ethereum would make ETH scarcer.
These two factors together with the declining stock exchange reserves on the stock exchanges, as Cointelegraph has already reported, generally indicate an optimistic outlook for ETH in the medium term. The analyst noted:
“With EIP-1559 and Proof of Stake, it’s possible that ETH’s supply never exceeds 120 million tokens, which is extremely tight considering how absurdly useful it is, it’s roughly 5.7x more than 21 million BTC but it’s sustainable and about 20x more useful than programmable money and collateral. “
Macro landscape, Treasury yields are still worrying
The momentum in US 10-year Treasury yield is likely to be the main catalyst behind the slowdown in Bitcoin and ETH momentum over the past 12 hours, as shown by the inverse correlation in the chart below.
Portfolio managers and strategists have raised concerns about the overheated bond market and its potentially negative impact on the risk market.
Hinesh Patel, Portfolio Manager at Quilter Investors, said:
“While no answer is currently the only move on offer, Powell is putting bond markets in danger, whatever Powell is doing at this point in time. If they do nothing, the bond market will continue to drive yields up to seek that.” Fed to increase or adjust bond buying while if it acts now it will be accused of over-stimulating and getting too hot. “
Bitcoin, Ethereum and the rest of the crypto market could decouple from the risk market and stocks. Ideally, however, the US Treasury’s return should stabilize so that the crypto market can see a sustained upward trend in the short term.