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Analyzing the Declining Ethereum Price: 3 Factors Behind its Struggle Against Bitcoin

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The Ethereum price is down against Bitcoin due to three key factors:

1) Market Dominance: Bitcoin continues to maintain its position as the leading cryptocurrency, with a significantly higher market dominance compared to Ethereum. This dominance creates a perception of stability and trust among investors, leading them to prioritize Bitcoin over other cryptocurrencies, including Ethereum.

2) Scalability Challenges: Ethereum has faced scalability challenges, especially during periods of high network activity, which has led to slower transaction times and increased fees. This has resulted in some users seeking alternatives, including Bitcoin, which is considered more reliable and efficient for certain transactions.

3) Market Sentiment: The overall market sentiment plays a crucial role in the performance of cryptocurrencies. In recent times, Bitcoin has garnered significant attention and institutional investment, leading to a surge in its price. This surge has created a positive sentiment around Bitcoin, while Ethereum has not enjoyed the same level of attention. Consequently, investors may be more inclined to invest in Bitcoin, causing the Ethereum price to decline against it.

The price of Ethereum’s native token, Ether (ETH), has hit a 15-month low compared to Bitcoin (BTC). This is the lowest price since Ethereum switched to proof-of-stake (PoS). In the past, Ethereum often outperformed BTC during bullish market trends, but this relationship began to change in 2023.

Several factors have contributed to the drop in the ETH/BTC pair. Stringent regulations against the crypto industry, reduced inflows from retail and institutional investors, and an increase in investors seeking shelter in US-dollar-pegged stablecoins have all impacted sentiment for Ethereum.

Additionally, Bitcoin dominance has been steadily rising. Bitcoin’s market dominance has reached 54%, its highest level in the last 30 months. This indicates that investors are feeling more bullish about BTC and possibly allocating less money to Ether investments. The upcoming Bitcoin halving event in April 2024 and the potential launch of a spot BTC ETF have also influenced investor sentiment.

The ETH/BTC pair dropped to 0.050 BTC on October 23 and has remained in a downtrend since then. The pair’s fall below its 200-week exponential moving average near 0.058 BTC suggests the possibility of further downside in the short-term. The 200-week EMA has historically served as a reliable support level for ETH/BTC bulls, so its breach raises concerns.

These market dynamics, investor sentiment, and regulatory environment are likely to continue impacting Ethereum’s price relative to Bitcoin. It is important for investors to conduct their own research and make informed decisions, as every investment and trading move involves risk.

Disclaimer: This article does not provide investment advice or recommendations. Readers should conduct their own research before making any decisions.

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