Why is Ethereum (ETH) underperforming Bitcoin (BTC) since the merger?

by James · September 19, 2022

The Ethereum (ETH) price has fallen significantly since September 11, but it has reached a confluence of support levels that could initiate a rally.

After many delays, the Ethereum merger finally went live on September 15th, transforming the network into a proof-of-stake consensus. Now, former Ethereum miners have flocked to Ethereum Classic, significantly increasing the hash rate in the process.

In addition, it massively reduced the power consumption of Ethereum, which in turn made it a sustainable cryptocurrency. This is expected to have long-term positive effects on the price for several reasons, one of which is that it is now more acceptable to environmentally friendly investors.

However, the ETH price has fallen since the merger and indeed has underperformed Bitcoin (BTC). Below we will look at several reasons why this may have happened.

Table of Contents

A potential bottom

ETH has been falling since reaching an all-time high of $4,868 in November 2021. The downtrend has led to a long-term low of $880 in June 2022. This apparently caused a break from the horizontal support area of $1,300 (red circle).

However, the price retreated shortly after, reclaiming the $1,300 range in the process. That can now potentially validate it as support.

Despite this, the bullish reversal is yet to be confirmed. The reason for this is that the RSI has not yet broken out of its bearish divergence trend line (green line). Until that happens and then the indicator moves above 50, the long-term trend cannot be considered bullish.

The daily chart supports the possibility that ETH will bounce back soon. There is a lot of support confluence between $1180 and $1300.

This support series is made by:

$1250 horizontal support level
Support line for a descending parallel channel
Rising support line (white)
1:1 length of waves A and C

Therefore, it is very likely that the price will bounce when it reaches this level. A potential breakdown from the zone would instead suggest that a new yearly low will be reached.

ETH/BTC is going back

ETH/BTC has also fallen since September 7th. At the time, it had just completed a five-wave up move.

Since then, there is probably correction inside an ABC correcting structure. Currently, ETH has bounced on the 0.5 Fib retracement support level of ₿0.067, possibly indicating the completion of wave A.

Therefore, it is possible that the b-wave will move back towards ₿0.08 before another drop that will complete the entire correction.

For Be[In]Crypto’s Latest Bitcoin (BTC) Analysis, click here.

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