Ethereum Hits 4-Year Low Against Soaring Bitcoin: A Tale of Two Cryptocurrencies

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The value of Ethereum (ETH) has plunged significantly against Bitcoin (BTC), reaching levels not seen since March 2021. On Sunday, the worth of one Ether dropped to approximately 0.03 BTC, marking a dramatic 50% decrease from its value a year ago, as per CoinGecko. Meanwhile, Bitcoin has been on an upward trajectory, outperforming Ethereum and other digital assets, reaching a fresh all-time high of $109,000 early Monday morning.

Source: CoinGecko

The decline in Ethereum’s worth coincides with a significant increase in Bitcoin’s yearly yield, now reaching 160%. Over the past week, Bitcoin has surged by approximately 16.70%, outperforming Ethereum’s more modest growth of 7.50% during the same period. As a result, there appears to be a growing preference among investors for Bitcoin, potentially altering the dynamics between these two digital currencies.

Solana’s Memecoin Frenzy Outspaces Ethereum

The allure of Ethereum, frequently associated with its pioneering introduction of smart contracts and decentralized finance (DeFi) applications, has faced challenges in keeping up as new options emerge. Specifically, Solana has garnered significant interest, boosted by memecoin trends and events such as Donald Trump’s memecoin launch on Solana rather than Ethereum.

During this current market cycle, Ethereum has noticeably lagged behind, especially since Solana has been gaining popularity due to the hype surrounding meme coins and occasions like the launch of Trump’s official meme coin on Solana rather than Ethereum. This is according to Min Jung, an investment analyst at Presto Research, as shared with CoinDesk.

Despite facing difficulties, Ethereum continues to maintain its allure among institutional investors. A crypto lending platform backed by Trump and his sons, World Liberty Financial, has been increasing its holdings of Ether. Jung points out that Ethereum’s unique position as one of the two cryptocurrencies with an Exchange-Traded Fund (ETF) keeps it significant in the eyes of major investors.

Ethereum’s Taker Ratio below 1.00

The balance of trades on Ethereum, as measured by the Taker Buy Sell Ratio (which assesses trading sentiment), is currently at 0.9723. This suggests that sellers hold a slight edge over buyers. As for its current price, which stands at $3,283.95 following a 2.26% increase, Ethereum’s volatile market behavior has traders cautious about engaging in leveraged positions. According to CryptoQuant, these observations have been made.

Source: CryptoQuant

In simple terms, Bitcoin is not only surpassing Ethereum but also dominating traditional investments such as gold. One Bitcoin currently holds the same worth as approximately 40 ounces of gold, and Bitcoin’s share of the total market capitalization of gold has grown to 11.4%. This trend suggests that more investors are favoring Bitcoin as a means for preserving value.

Contrarily, Ethereum has found it challenging to sustain its pace. The graph of its price, which previously reached nearly $4,250, now experiences recurring instability due to high volatility. Significant drops like the one in March 2023 indicate downward trends, as the Taker Buy Sell Ratio persistently dips below 1.00 – an indication that traders are staying cautious and not actively buying more than they’re selling.

Starting from mid-2024, Ethereum began to show signs of recovery, gaining momentum along with an increasing number of buy orders compared to sell orders. Yet, the continuous ratio below 1.00 suggests that the market remains somewhat skeptical. Experts speculate that a rise above 1.00 could signal renewed optimism and potentially mark a bullish surge for Ethereum.

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2025-01-20 19:22