Following the approval of spot Ethereum exchange-traded funds (ETFs), Ether (ETH) surged to $3,972 before experiencing a downturn over the past week, dropping by 10% compared to Bitcoin and the wider crypto market. This has led traders to question whether the altcoin’s downward trend is coming to an end.
In the same period, Bitcoin’s (BTC) price decreased by 6%, while the total cryptocurrency market capitalization fell by 5.3%. Several market and technical indicators suggest that ETH may see a further correction before attempting a recovery.
The ETH/BTC ratio has been trending downward in the past week, with Ether declining by 10% in the last seven days, underperforming Bitcoin and other prominent layer 1 tokens. The ETH/BTC ratio dropped by 5.21% from 0.055 on June 3 to 0.0513 on June 11, its lowest level since May 20.
Various factors have contributed to ETH’s underperformance, including Bitcoin-specific events in 2024. The success of U.S. spot Bitcoin ETFs, with nearly $2 billion in capital inflows last week, has impacted Ether’s performance. Additionally, upcoming events like the CPI reading and FOMC meeting decision on rate cuts have triggered a significant market correction, affecting all crypto prices, including Ether.
Moreover, there has been a decline in Ethereum’s network activity over the past 90 days, with daily active addresses dropping from 622,963 on March 20 to 458,400 on June 10. This represents a 1.2% decrease in just the past 48 hours.
While Ethereum remains a dominant network in the layer 1 sector, Solana has gained market share in terms of on-chain activity. Ethereum’s NFT volume has decreased by 9% in the last week, and its total UAWs have dropped by 4.5% to over 524,000 million. This is significantly lower than the 2.7 million UAWs on Solana, which have seen a 74% increase.
The decreasing on-chain activity indicates a diminishing demand for Ether within the ecosystem, impacting its price negatively. Ether faces resistance at the $3,500 level, with past price action showing that this area poses a significant challenge for ETH bulls.
If sellers become more active around this resistance level, Ether’s price is likely to decline further. The current market setup suggests a continued downtrend for Ether, with the potential for a drop to $2,840 if the $3,400 support level is breached. Traders and investors are advised to conduct their own research before making any investment decisions, as all trading moves involve risk.