Ethereum Set To Outperform Bitcoin In Coming Months

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Published: Jul 4, 2024, 06:41 GMT+00:00

Key Points:

Ethereum may experience a significant breakout against Bitcoin following the anticipated launch of spot Ether ETFs.
While a "sell-the-news" event is expected post-ETF launch, historical trends suggest a potential rebound similar to Bitcoin's performance after its own ETF launches.
In U.S. dollar terms, ETH's price is stabilizing above its 200-day EMA at $3,090, with a possible rebound toward $3,455 in July.

Ethereum’s native token, Ether (ETH), looks poised to undergo a massive breakout versus its top crypto rival, Bitcoin (BTC), after a seven-year wait, according to a report published by K33 Research.

ETH is Trading At a Discount Versus BTC

The ETH/BTC exchange rate has remained stagnant at 0.055, and ETH futures are trading at a discount compared to Bitcoin futures, argues K33 senior analyst Vetle Lunde, noting that the eventual launch of Spot Ethereum exchange-traded funds (ETF) may break the jinx.

Most traders are anticipating Ether to undergo a “sell-the-news” event after the ETF launch, which may push its valuation down against both the U.S. dollar and Bitcoin in the coming months.

However, Lunde expects that the selloff will eventually subside, similar to Bitcoin’s sharp rebound two weeks after entering a declining mode after the launch of nine spot ETFs in the United States.

“Bitcoin saw a 13-day return of -21.5% following the ETF launch, stemming from GBTC outflows,” he argued, saying that Ether may face similar downturns in the first days after the ETF launch.

He added:

“ETFs are a solid catalyst for relative ETH strength as the summer progresses and flows accumulate, and I firmly view current ETHBTC prices as a bargain for the patient trader […] We maintain a bullish ETH outlook in anticipation of net inflows equivalent to 0.75-1% of ETH’s circulating supply in the five months following the launch.”

The comments appear in the wake of Ether’s sustained downtrend against Bitcoin in recent years. Notably, the widely traded ETH/BTC pair reached an all-time high of 0.151 BTC in June 2017 at the peak of the initial coin offering (ICO) boom.

ETHBTC weekly performance chart. Source: TradingView

Since then, the pair has dropped by approximately 64.50% and was trading for around 0.054 BTC as of July 4, 2024. This further shows that ETH’s returns in the U.S. dollar term have lagged far behind those of BTC in the past seven years.

Aksel Kilbar, a chartered market analyst, has spotted ETH/BTC in a bullish reversal trend due to the formation of what appears to be an inverse-head-and-shoulder pattern.

ETH/BTC daily price performance chart. Source: Tech Charts/Aksel Kilbar

An event of a breakout above the pattern’s neckline resistance of around 0.061 BTC may push the price by as much as the maximum distance between its deepest point and the neckline. In other words, ETH/BTC may rally toward 0.080 BTC next.

Ethereum Price Prediction in U.S. Dollar Terms

From a technical standpoint, ETH’s price is stabilizing above its 200-day exponential moving average (200-day EMA; the blue wave) at around $3,090. Holding strong above this wave support may lead to a price rebound toward the 50-day EMA (the red wave) at around $3,455 in July.

ETH/USD daily price chart. Source: TradingView

Conversely, a break below the 200-day EMA exposes Ether to the risks of declining toward the lower trendline of its prevailing descending channel pattern. This trendline visibly aligns with a resistance-turned-support level of around $2,727, down circa 15% from the current price levels.

About the Author

Yashu Golaauthor

Yashu Gola is a journalist focusing on cryptocurrency markets since 2014. He writes for Cointelegraph and CoinChapter and has previously served as the chief editor for NewsBTC.