Ethereum Drops to Lowest Levels Against Bitcoin in 3.5 Years But…

Ethereum’s native token, Ether (ETH), dropped to its worst levels against Bitcoin (BTC) in over three years, hitting 0.0367 BTC on Oct. 25, 2024.

At the core of Ethereum’s underperformance is its increasing competition with other layer-1 blockchain projects, primarily Solana (SOL), which reached a record high versus Ether earlier this week.

Meanwhile, the arrival of spot Bitcoin exchange-traded funds (ETF) in January 2024 shifted institutional capital toward the BTC market, dwarfing even the hype surrounding the launch of Ethereum ETFs later in the year.

Technical Indicators Hint At Sharp ETH/BTC Recovery

The ETH/BTC pair has been consolidating within a falling wedge pattern since August 2024, indicating a possible trend reversal.

A falling wedge, marked by converging downward-sloping trendlines, forms when the price trends inside a range defined by two converging, descending trendlines. Meanwhile, it resolves once the price breaks above the upper trendline and rises to length at a distance equal to the wedge’s maximum height.

As of Oct. 25, ETH/BTC was trading around the wedge’s lower trendline, hinting an immediate rebound toward the upper trendline of around 0.0383 BTC. But, if the price breaks above the upper trendline, it’s likelihood of continuing its recovery toward the 0.0447 BTC target will increase by 2024’s end.

The target level coincides with ETH/BTC’s 200-day exponential moving average (200-day EMA; the blue wave).

In addition, there exists a notable bullish divergence between Ethereum’s rising daily Relative Strength Index (RSI) and falling prices versus Bitcoin. Notably, the prices have made lower lows, while the RSI has set higher lows, suggesting weakening bearish momentum.

Solana Becomes Overheated Against Ethereum — Another Bullish Point

Solana’s technical indicators suggest a possible correction verus Ethereum, which could create an opportunity for the latter to regain momentum against Bitcoin.

Three bearish factors are currently in play for the SOL/ETH pair, indicating potential weakness ahead. First, the weekly RSI for SOL/ETH is hovering around 70, hinting at overbought conditions and the likelihood of a pullback.

Additionally, there is a bearish divergence, where SOL/ETH prices are climbing while the RSI declines, signaling weakening momentum.

Furthermore, Solana’s price structure is showing signs of a rising wedge—a bearish pattern that typically forecasts a reversal. If this pattern breaks down,

SOL/ETH could potentially decline to the 0.0357-0.0436 ETH range by early 2025, representing a possible 40-50% drop. Such a correction in Solana’s valuation may benefit Ethereum’s position, providing the ETH/BTC pair a chance to recover.