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Ethereum faces a significant downturn as its price plummets over 30% within a month, driving the ETH/BTC ratio to a four-year low, highlighting Bitcoin’s dominance.
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Amidst escalating selling pressure, the Ethereum network has seen a substantial increase in supply, with over 66,748 new ETH added, leading to a weaker market demand.
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According to Ultra Sound Money, the uptick in circulating supply is a principal factor in Ethereum’s price decline, as more tokens flood the market without corresponding demand.
Ethereum’s price has dropped 30% this month, with increased supply pressuring ETH’s performance against Bitcoin. Key levels to monitor are $2,000 and $2,223.
Price Drops to 2023 Levels as ETH/BTC Ratio Hits 4-Year Low
ETH’s recent price action has revealed notable volatility, particularly from February onwards. Following a relatively stable early month, Ethereum experienced a steep decline after breaking below crucial support levels on February 25. Now trading around $2,089, the cryptocurrency has returned to values not observed since December 2023.
This decline has further exacerbated the ETH/BTC ratio, which now stands at 0.02, marking its lowest since January 2021. Such a plunge illustrates that Ethereum is currently underperforming compared to Bitcoin.
The ETH/BTC exchange rate measures the amount of Bitcoin needed to purchase one Ether. A decreasing ratio signifies that Ethereum is losing value relative to Bitcoin, further emphasizing the current bearish sentiment surrounding Ethereum. The backdrop includes broader market trends that have contributed to increased selling momentum.
A critical factor in this price drop is the surge in Ethereum’s circulating supply. A recent report indicates that Ethereum has seen a net addition of 66,748.91 ETH, valued over $140 million at current prices, in just the last month.
This increase in supply typically exerts downward pressure on prices, especially when market demand fails to match such growth. The current trajectory suggests that unless demand picks up significantly, the excess supply will continue to weigh on Ethereum’s price.
Will ETH Bears Push Price Below $2,000?
Technical analysis of Ethereum’s daily performance reveals a concerning trend: ETH is trading below the lower trend line of a long-term descending channel. Such a breach indicates potential acceleration in selling activity, raising concerns for investors.
If this bearish momentum continues, there is a strong possibility that Ethereum could fall below $2,000, potentially reaching levels as low as $1,922.
Conversely, if buying interest resumes, there remains a chance for the price to rebound toward $2,223.
Conclusion
As Ethereum navigates a challenging landscape marked by increased supply and depreciating value against Bitcoin, market participants are closely monitoring key support levels. The next critical phases for ETH will hinge on demand dynamics and the broader market sentiment. Investors should remain vigilant and strategically assess potential entry points amidst this volatility.
