Reporter
Published:
- Ethereum’s [ETH] performance has reached a multi-year low.
- Bitwise’s executive maintains optimism about a potential ETH price rebound.
Ethereum’s [ETH] valuation compared to Bitcoin [BTC] raised concerns in the market earlier this week, as the ETH/BTC ratio fell below 0.04 for the first time in almost four years.
This pair measures ETH’s worth in relation to BTC, and its sustained decline indicates the altcoin’s troubling underperformance.
Indeed, ETH has lost its yearly gains. Meanwhile, BTC surged by 40%, and Solana [SOL], ETH’s primary rival, increased by 18% year-to-date.
ETH’s time will arrive…
Nonetheless, Bitwise’s digital asset manager expressed confidence in ETH’s potential bullish reversal over time. Bitwise CIO Matt Hougan took a contrary position on ETH, emphasizing possible recovery following the U.S. elections.
One of his recent memos to investors mentioned,
“I believe people are too hasty to overlook Ethereum and the tangible success we’re currently witnessing within its ecosystem.”
Hougan referenced the prediction platform Polymarket, a substantial stablecoin market, and the DeFi industry as significant positive indicators for the altcoin. Furthermore, the growing institutional interest from firms like BlackRock is also beneficial for ETH’s valuation.
He added that enhanced regulatory clarity in the DeFi sector could elevate the altcoin’s status, particularly after the U.S. elections. He commented,
“I suspect the market may reevaluate Ethereum as we approach the November elections along with any regulatory clarity that comes into play. For now, it appears to be a potential contrarian bet to consider through the year’s end.”
ETH’s present challenges
Market analysts have pointed out various reasons behind ETH’s underperformance compared to BTC.
David Duong, Coinbase’s Head of Institutional Research, attributed much of the current subdued pricing to typical market patterns during summer, characterized by low activity levels.
Additionally, the disappointing performance of U.S. spot ETH ETFs has been cited as a factor contributing to weak sentiment surrounding ETH.
In contrast to its U.S. BTC ETFs, ETH ETFs have recorded net negative flows totaling $606 million since their inception in July.
According to Hougan, the uncertainty surrounding regulations has also impacted ETH negatively, particularly in light of the impending U.S. elections with no apparent frontrunner.
Moreover, he mentioned that concerns regarding ETH’s tokenomics contributed to its current difficulties.
For context, ETH revenue has plummeted to a four-year low, as the scaling solutions have drawn a significant portion of volume away from the Layer 1 base layer. This has raised worries among users, as noted by Hougan.
“Many people are questioning whether Ethereum has undermined itself by scaling away from its essential Layer 1 blockchain.”
Currently, the ETH/BTC ratio is on the brink of breaking below its long-term descending trendline.
That said, market analyst Benjamin Cowen forecasted that ETH/BTC might reach its low point by year’s end. At the time of this writing, ETH was trading at $2.3K, a decline of 43% from its March peak of $4K.
Source: ETH/BTC, TradingView
