Ethereum Price Set To Break Out Against Bitcoin, But How High Can It Go?

Overview

The cryptocurrency market experienced significant turbulence last week, with Bitcoin and Ethereum leading a market downturn that saw many cryptocurrencies reach new multi-month lows. Despite the stronger selling pressure on Bitcoin, Ethereum is showing signs of a potential breakout against Bitcoin, a development that could signal a shift in the dynamics between these two leading cryptocurrencies.

Ethereum’s Technical Position

Recent technical analysis of the ETH/BTC ratio indicates that Ethereum is approaching a critical breakout point against Bitcoin after a prolonged period of consolidation beneath a descending trendline. This trendline has been in place since a peak in relative valuation in July 2017, when 1 ETH was valued at 0.154 BTC. Since then, the ETH/BTC ratio has formed a series of lower highs, contributing to the creation of a falling resistance trendline.

The lower boundary of this pattern has been established around a support zone of approximately 0.02. This level has shown consistent buying interest for Ethereum in relation to Bitcoin. Currently, the ETH/BTC ratio is trading near 0.030. A recent green candlestick on the 2-week chart is a significant indicator for a bullish outlook for Ethereum’s performance against Bitcoin.

Long-Term Triangle Dynamics

The analysis suggests that Ethereum is on the verge of breaking out of a long-term triangle formation. A sustained move above the descending triangle’s upper trend boundary could enable Ethereum to enter a phase of sustained outperformance against Bitcoin. This potential breakout is crucial, as it could signify a shift in market sentiment and the relative strength of Ethereum compared to Bitcoin.

Potential Upside Targets

In the event of a breakout, crypto analyst Jonathan Carter has outlined a series of potential upside targets for the ETH/BTC pair. The first target is positioned at around 0.040 BTC, marking a significant departure from the compressed range observed in recent months. Should momentum continue, other potential targets include values up to 0.154, which represents the peak from 2017.

These targets are based on Ethereum’s performance relative to Bitcoin and do not directly translate into absolute price levels. The performance could manifest in two primary ways: either through increased inflows into Ethereum compared to Bitcoin or through a more significant decline in Bitcoin’s value during a market correction. The former scenario suggests a rotation into Ethereum and the broader altcoin market, potentially heralding an altcoin season.

From author

The evolving relationship between Ethereum and Bitcoin remains a focal point for traders and investors within the cryptocurrency space. The technical indicators suggest that Ethereum might be on the cusp of a significant move, which could reshape the market landscape. Observing these developments closely will be vital for understanding potential market shifts and investment strategies.

Impact on the crypto market

• Increased buying interest in Ethereum could lead to a broader rotation into altcoins, impacting overall market dynamics.
• A successful breakout in the ETH/BTC ratio may encourage more investors to shift focus from Bitcoin to Ethereum, potentially altering market sentiment.
• A decline in Bitcoin’s dominance might pave the way for an altcoin season, benefiting various cryptocurrencies beyond just Ethereum.
• Sustained momentum in Ethereum’s performance could lead to heightened volatility in both Bitcoin and Ethereum markets.
• The relationship between Ethereum and Bitcoin will be critical for traders, as shifts in this dynamic could influence trading strategies and market movements.