Ethereum is stable at the time of writing, but still underperforms Bitcoin. While ETH is holding above $2,400 and could even surpass $3,000 in the coming years, a rapid strengthening of the world’s most valuable coin, on the other hand, could see the ETH/BTC ratio reach multi-month lows.
ETH Fights Bitcoin, ETH/BTC Ratio Falls to 40-Month Low
IntoTheBlock data from September 20 reveals that ETH is trading at its lowest level against Bitcoin in over 40 months. This trend clearly shows that the market, even with institutional involvement, is bullish on BTC.
Interestingly, ETH continues to underperform despite the approval of a spot Ethereum ETF for trading in July 2024. The approval of these complicated derivatives allowed institutions to gain exposure to the second most valuable coin within the law without breaking the bank.
Previously, institutions in the United States that wanted to buy ETH could only do so by purchasing shares of Grayscale ETHE. The problem is that fees were higher when the financial world was unaware of ETH’s regulatory status. While nothing has changed, the approval of the spot Ethereum ETF, preventing issuers from staking coins purchased by customers, was seen as a victory.
The U.S. Securities and Exchange Commission (SEC) has not yet made an official statement endorsing ETH as a commodity similar to Bitcoin. However, the Commodity Futures Trading Commission (SEC) has repeatedly stated that ETH is a commodity.
IntoTheBlock analysts believe that institutional investors are confident in Bitcoin’s prospects as ETH falls against BTC. In particular, they noted Bitcoin’s relative stability compared to Ethereum, an asset with a higher risk-reward profile.
Will Ethereum find support?
Even with this assessment, it should be noted that Bitcoin remains a transaction layer, benefiting from a first-mover advantage. On the other hand, Ethereum is the first shrewd contract platform and supports various innovations, from DeFi, NFTs, and now driving tokenization.
Earlier, Larry Fink, CEO of BlackRock, said that the tokenization of real-world assets (RWAs), most of which are held on Ethereum, will grow to a trillion dollars in market capitalization. BlackRock released BUILDa product tokenizing US Treasury bonds on the Ethereum platform.
The question remains whether ETH will rebound against BTC. Looking at the daily chart, the trend seems to be changing, at least in the near term. The bullish double-bar formation from September 18 and 19 was confirmed today.
At the same time, ETH seems to be strengthening, having surpassed the 61.8% Fibonacci retracement level of the 2020-2021 trading range.
