Key Points
- Ethereum (ETH) has underperformed Bitcoin (BTC) in 2024 due to slow exchange-traded funds growth and competition from other blockchains.
- Weak fundamentals and technicals could potentially push Ether’s price lower in the future.
Ethereum, the world’s second-largest cryptocurrency, has struggled to keep up with Bitcoin’s performance in 2024.
The growth of its exchange-traded funds (ETFs) has been sluggish, and competition from other layer-1 and layer-2 blockchains has intensified.
Ethereum’s Performance and Technicals
Ethereum’s price has risen by less than 20% this year, while Bitcoin’s price has increased by over 50%.
Technical analysis suggests that Ether could face more weakness in the coming months.
The cryptocurrency formed a double-top chart pattern around $4,000 on the weekly chart and dropped below the pattern’s neckline at $2,824 in July, confirming a bearish breakout.
A death cross pattern has also formed as the 200-day and 50-day Hull Moving Averages (HMA) made a bearish crossover.
The HMA, which reduces lag by using weighted moving averages to smooth out price data, last formed a death cross on Ethereum’s weekly chart in March 2022, after which the coin’s price dropped by over 70%.
Ether has also formed a bearish pennant chart pattern, characterized by a long vertical line followed by a symmetrical triangle.
This pattern typically indicates a bearish breakout when the triangle’s two lines converge.
This consolidation is happening at the 50% Fibonacci Retracement level, hence increasing the chances of a strong bearish breakout in the near term.
The next target to watch is $2,111, its lowest point on Aug. 5.
Challenges for Ethereum
Besides weak technicals, Ethereum is also facing significant fundamental challenges.
Ether ETFs have not seen strong inflows a few months after their launch.
According to SoSoValue, these funds have experienced cumulative outflows of over $530 million, primarily due to the Grayscale Ethereum Fund.
In contrast, Bitcoin ETFs have crossed the $20 billion inflow level, indicating higher demand from institutional investors.
Ethereum is also facing stiff competition in areas it once dominated, like DeFi and NFTs.
Data by DeFi Llama shows that Solana has surpassed Ethereum in terms of DEX volume in the last seven days.
Solana handled $10.87 billion compared to Ethereum’s $9.69 billion.
If this trend continues, Solana might overtake Ethereum this month.
This performance is largely driven by the popularity of Solana meme coins like Dogwifhat, Bonk, and Popcat among traders.
All Solana meme coins have gained over $10 billion in market cap.
Additionally, some high-profile Ethereum holders, including Vitalik Buterin and the Ethereum Foundation, have recently sold thousands of coins.
Therefore, a combination of weak fundamentals and technicals could push Ether lower in the coming weeks.