Ethereum-Bitcoin Ratio Surpasses 0.04 Mark: Potential Threat to Altcoins?

The Ethereum-Bitcoin (ETH/BTC) trading pair has recently dipped below 0.04, a level not seen since April 2021, raising concerns about the impact on the broader altcoin market.

The ETH/BTC ratio is a crucial metric for assessing the strength of the altcoin market. It measures the relative price performance of Ethereum against Bitcoin and is often viewed as a predictor of future price movements in altcoins.

As of September 16, 2024, the ETH/BTC ratio stands at 0.039, a level last recorded in April 2021. Following its peak at 0.088 in December 2021, the ratio has been steadily declining, with intermittent minor rebounds before continuing its downward trend.

A rising ETH/BTC ratio signifies Ethereum’s outperformance against Bitcoin, while a falling ratio suggests that Bitcoin is surpassing Ethereum and other altcoins. This shift in performance could lead to a loss of confidence in Ethereum, prompting investors to gravitate towards Bitcoin for its stability and better returns.

The current Bitcoin dominance (BTC.D) stands at 57.78%, showing a consistent upward trajectory since November 2022. An increasing BTC.D reinforces the weakening altcoin market, indicating a capital flight from small-cap tokens, potentially resulting in volatile price fluctuations and rapid declines.

Despite the approval of Ethereum exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC), the impact on ETH’s price has been less significant compared to Bitcoin. Data from crypto ETF tracker SoSoValue reveals that US Ethereum ETFs experienced a net outflow of $581 million, whereas US Bitcoin ETFs saw a net inflow of $17.3 billion.

Ethereum is currently priced at $2,282, a level last observed in January 2024. Although the cryptocurrency briefly touched $3,900 before retracing its gains, recent movements of 112,000 ETH to crypto exchanges suggest a reluctance among investors to hold onto ETH amid its weakening position relative to Bitcoin.

Some analysts suggest that now could be an opportune moment to convert Bitcoin holdings to Ethereum, anticipating a potential 180% surge in the struggling ETH/BTC ratio. The persistent selling pressure on Ethereum has driven ETH into oversold territory, providing hope to ETH holders that the digital asset may have reached its bottom and could soon experience a robust price recovery.