Ethereum marked a double bottom against bitcoin. What does it mean?

The Ethereum network cryptocurrency ether (ETH) has been in a sustained bearish trend against bitcoin (BTC) for the past two years. However, it is currently showing signs of a possible change of direction.

Over the past month, ETH has formed a “double bottom” technical structure against BTCa pattern that often indicates a possible bearish trend reversal. In other words, this movement suggests that a bullish rebound could occur.

The double bottom is a formation that occurs when the price of an asset falls to a price level from which it rises and later experiences that movement again. In this way, it is displayed in a graph in the shape of the letter “W”, with two tests from the same floor.

This technical chart analysis pattern reflects the market’s inability to push the price lower. Consequently, it generates expectations of an increase.

As the following graph shows, ETH has fallen twice in the last month to 0.038 BTCa level from which it rebounded upwards. This demonstrates a formation of a double bottom pattern, which exhibits strength in demand at that price level that prevents it from declining.

This technical formation means that ETH could be in a consolidation phase to culminate its bearish streak against BTC. Although, for now, this would require strong catalysts, given the significant underperformance shown by the Ethereum cryptocurrency.

ETH shows great weakness against BTC

Current ETH vs BTC price zone is lowest since 2021although there is a difference with that moment. Trader Oliver Ramos stands out In this regard, then “the direction was clearly bullish, while it is currently bearish since the Merge, in September 2022.”

Precisely, the price of ETH has been in a sustained downward trend against bitcoin for two years, when the Ethereum update called Merge occurred in 2022. Furthermore, as seen in the next chart, it is far from its all-time high of USD 0.15 recorded in the 2017 bullish cycle.

This may indicate that although the Merge improved the energy efficiency of issuance of ETH, the impact on the price was limited, in part because it did not solve immediate problems such as scalability or high transaction fees. Besides, The growing adoption of bitcoin as an asset has strengthened its position in the market.

It should be noted that ETH is trading 50% below its historical maximum price in dollars, which was USD 4,900 in 2021. On the other hand, the price of BTC is only 17% from its record of USD 73,700 reached seven months ago . Besides, As Bitcoin Maintains 45% Gains in 2024, Ether Has Nearly Erased Its Year’s Gain.

In the futures market, ETH call options have seen more than twice as many sales in the last month as those on the Derive exchange. This means that the bullish sentiment of traders of these instruments, which allow them to acquire the currency at certain prices in the future, has decreased.

“The skew in ETH open interest, with nearly 2.5 times more put options sold than bought, suggests traders view the upside as limited for now. “It will be key to watch this divergence between the two assets as we get closer to election day,” said Nick Forster, founder of Derive.

As anticipated by CriptoNoticias, the presidential elections in the United States, scheduled for November 5, may change the scenario for the cryptocurrency market. The ecosystem has received bipartisan support, which means better regulatory expectations for the following years. Therefore, could play a key role for ETH.