Ether (ETH), the native cryptocurrency of Ethereum, has experienced a significant surge of over 20% against Bitcoin (BTC) since February 12th. This surge can be attributed to the anticipation surrounding the potential approval of a spot Ether exchange-traded fund (ETF) in the United States by May of this year.
Despite this bullish momentum, the widely-tracked ETH/BTC pair is currently at a historical turning point that could increase the risks of a correction in the coming days. Let’s examine these bearish setups in detail.
Looking at the four-hour ETH/BTC chart, we can observe that Ether is hovering around its 1.00 Fibonacci retracement level at 0.06044 BTC. Additionally, the relative strength index (RSI) reading has entered the “overbought” territory after crossing above 70, indicating a potential correction scenario.
The combination of an overbought RSI and a historical resistance level mirrors a fractal from January 2024, which preceded an 11.65% drop in ETH/BTC rates. This suggests that there may be purchasing fatigue among investors, leading to a decline in Ethereum’s value relative to Bitcoin. The initial decline could bring the ETH/BTC pair towards the 0.786 Fibonacci retracement level at 0.058 BTC.
Furthermore, a rising wedge pattern has emerged on the chart, which, if confirmed, could further depress the ETH/BTC exchange rate. This pattern typically indicates a shift from upward to downward momentum and could potentially lead to a 10.85% decrease to a level of 0.053 BTC by March.
On the weekly timeframe chart, Ether is also showing signs of a bearish reversal as it struggles to break above its multiyear descending trendline resistance. Interestingly, this trendline aligns with ETH/BTC’s 50-week exponential moving average (50-week EMA). The resistance confluence at this level may impede Ether’s upside attempts in the coming weeks, potentially causing a pullback towards the 0.051 BTC level, which has previously witnessed strong rebounds.
In addition to the technical factors, there is also a notable divergence in the portfolios of major investors, or “whales,” between Ether and Bitcoin. Data from Glassnode shows a significant decrease in the number of entities holding 1,000–100,000 ETH in February, while the number of Bitcoin entities holding over 1,000 BTC has increased. This suggests a growing interest in Bitcoin among institutional investors, further strengthening the bearish case for ETH/BTC.
It is important to note that this article does not provide investment advice or recommendations. Investing and trading always carry risks, and readers should conduct their own research before making any decisions.