Ethereum, the world’s second-largest cryptocurrency by market cap, is struggling to keep pace with Bitcoin’s meteoric rise in 2024. Despite Bitcoin (BTC) surging over 50% this year, Ethereum has posted more modest gains, rallying by less than 20%. A confluence of technical and fundamental challenges is weighing on the coin, casting doubts over its near-term trajectory.
On the technical front, Ethereum appears to be in a precarious position. The weekly chart shows the formation of a double-top pattern around the $4,000 level. This bearish chart formation saw its neckline break at $2,824 in July, signaling a confirmed bearish breakout. The double-top, a classic reversal pattern, has historically marked the beginning of downward trends, and Ethereum seems to be following that trajectory.
In addition to this, Ethereum has experienced the dreaded death cross pattern, where the 200-day and 50-day Hull Moving Averages (HMA) have crossed in a bearish formation. The HMA, designed to smooth out price fluctuations and reduce lag, has amplified bearish sentiment in the market. The last time Ethereum formed a death cross was in March 2022, a move that saw the coin’s value plunge by over 70%.
Adding fuel to the fire, Ether has also developed a bearish pennant pattern, a formation that typically leads to a steep price drop when the two converging trendlines meet. This pattern is further validated by the fact that Ethereum’s price is consolidating at the 50% Fibonacci retracement level, a critical zone that often signifies the potential for further downside.
It’s not just technicals that are dragging Ethereum down. The coin is also grappling with significant fundamental headwinds. Ethereum-based exchange-traded funds (ETFs) have struggled to gain traction, with inflows remaining tepid months after their launch. According to data from SoSoValue, these funds have seen cumulative outflows exceeding $530 million, primarily driven by the Grayscale Ethereum Fund. In stark contrast, Bitcoin ETFs have experienced inflows surpassing $20 billion, reflecting a clear preference for Bitcoin among institutional investors.
Moreover, Ethereum is facing fierce competition in the decentralized finance (DeFi) and non-fungible token (NFT) spaces—areas it once dominated. Solana, a rival blockchain platform, has outpaced Ethereum in decentralized exchange (DEX) volume over the past week. According to DeFi Llama, Solana handled $10.87 billion in DEX transactions, surpassing Ethereum’s $9.69 billion during the same period. If this trend persists, Solana could eclipse Ethereum’s DEX volume entirely this month, as Solana has already processed $23.9 billion in transactions compared to Ethereum’s $24 billion.
A key driver behind Solana’s rise is the growing popularity of meme coins like Dogwifhat, Bonk, and Popcat, which have amassed over $10 billion in market capitalization. The surge in Solana’s meme coin ecosystem has drawn traders away from Ethereum, further eroding its market share.
Another alarming signal for Ethereum is the recent sell-off by high-profile Ethereum whales, including co-founder Vitalik Buterin and the Ethereum Foundation, who have offloaded thousands of coins in recent months. Large-scale selling by influential holders often shakes market confidence, and in Ethereum’s case, it could exacerbate the already fragile market sentiment.
The combination of weak technicals and struggling fundamentals suggests that Ethereum may face more downward pressure in the coming weeks. Should the bearish patterns continue to play out, the next key level to watch is $2,111—Ethereum’s lowest point on August 5. A breach of this support level could pave the way for even further declines.
As Ethereum contends with rising competition from faster, more scalable blockchains like Solana, and investor sentiment shifts towards Bitcoin, its outlook remains uncertain. Traders and investors will need to keep a close eye on both the technical signals and the evolving market landscape to gauge whether Ethereum can regain its footing or continue its slide.
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