Ethereum (ETH) Market Dynamics and Technical Analysis Point to Potential Recovery

Ethereum's native token (ETH) has plummeted to its lowest level against Bitcoin in over three years, reaching 0.0367 BTC on October 25, 2024

Ethereum (ETH) price hit a three-year low against Bitcoin (BTC) on Oct. 25, 2024, as the institutional interest shifted towards BTC ETFs and the Solana (SOL) rally added pressure.

After a dramatic entry into the spot Bitcoin ETF market in January 2024, institutional capital flowed overwhelmingly into the BTC market, despite the subsequent launch of Ethereum ETFs.

This shift in institutional focus contributed to Ethereum underperforming its primary competitor. Adding to the pressure, Solana emerged as a formidable rival, reaching record highs against Ethereum earlier this week.

As the dust settles from the solarium rally, discussions about a potential market capitalization flip have sparked up once more. However, Ethereum maintains a significant lead with a market capitalization of over $300 billion compared to Solana’s $82 billion.

Despite the current downturn, technical indicators hint at a potential sharp recovery for the ETH/BTC pair. The pair has been consolidating within a falling wedge pattern since August 2024, a formation often associated with trend reversals.

Some key technical observations include:

* The ETH/BTC pair has been forming lower highs and lower lows within the falling wedge pattern.

* The pair is currently trading near the lower trendline of the wedge, around 0.0367 BTC.

* The 50-day moving average (MA) is acting as resistance for the pair, around 0.038 BTC.

* The 200-day MA is providing support for the pair, around 0.034 BTC.

* The relative strength index (RSI) is indicating oversold conditions, around 28.

As Ethereum price continues to consolidate within the falling wedge pattern, industry experts are also keeping a close eye on the impact of layer-2 scaling solutions on the network’s revenue.

Katalin Tischhauser, Head of Research at Sygnum Bank, shared her thoughts on the matter in a recent statement.

“It’s too early to tell whether the layer-2 strategy is cannibalizing or fostering growth. The short-term impact is that L2s are taking away fee revenue from L1, but the long-term view is that the NET effect will be growth for the Ethereum L1 because the cheap L2s can catalyze new types of transactions previously not possible.”

However, concerns intensified after Uniswap announced its pivot to layer-2 Unichain, which could reduce Ethereum validator revenue by $400–500 million annually.

This development led VanEck to revise its 2030 Ether price prediction from $22,200 to $7,300. In other institutional developments, Grayscale Investments announced the upcoming rebranding of its Ethereum Trust to the Grayscale Ethereum Trust ETF, effective Nov. 4, 2024.

The trust, which trades under the ticker ETHE, has demonstrated strong performance with a 75.58% price total return over the past year, despite recent market volatility.

While short-term sentiment remains bearish, some analysts maintain optimistic long-term views. Henrik Andersson, Chief Investment Officer at Apollo Capital, expressed his bullishness in a recent statement.

“Solana did well, but ultimately, the scaling strategy has helped maintain Ethereum as the leading layer-1. It could reach new all-time highs in 2025, and our price target has been adjusted to $7,300.”

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