Ethereum’s recent price action has been closely tied to that of Bitcoin in the time since it faced a rejection at its recent highs of $290, with its inability to further extend its parabolic uptrend signaling that bulls may not be as strong as they were previously thought to be.
Further adding to this bearishness is the fact that this close correlation to BTC is starting to degrade, with ETH showing signs of weakness as the benchmark cryptocurrency finds strong support within the lower-$10,000 region.
This bearish sign suggests that ETH may see some slightly further losses in the near-term, but its mid-term outlook still remains bright.
Ethereum Begins Inching Lower Despite Bitcoin’s Stability; Here’s Why That’s Bearish
Ethereum’s latest uptrend came about after it reached lows of $240 during the market-wide selloff that was sparked when Bitcoin dropped to lows of roughly $9,500.
BTC’s recent recovery from these lows has allowed most major altcoins to similarly recover, but it is important to note that most major cryptos – including Ethereum – are now underperforming Bitcoin.
Luke Martin, a prominent cryptocurrency analyst on Twitter, spoke about Ethereum’s underperformance of Bitcoin, telling his followers that Ethereum’s lack of upwards momentum in spite of BTC’s stability seems to suggest that further downside is imminent.
“I expected alts to do well again this week as $BTC bounced. Entered $ETH & $EOS yesterday. The momentum has stopped for both. Not a good sign that the correlation broke down. Going to take the L on both as they drip -3%. Hopefully get a chance to buy lower,” he explained.
I expected alts to do well again this week as $BTC bounced.
Going to take the L on both as they drip -3%.
Hopefully get a chance to buy lower…
— Luke Martin (@VentureCoinist) February 19, 2020
Another bearish factor that many analysts have been musing as of late is the double top formation that ETH has formed around $290, but it is important to note that Alex Krüger – an economist who focuses primarily on cryptocurrencies – doesn’t believe that this will actually prove to be a bearish catalyst.
He goes on to note that $290 is, in his view, a good spot for traders to add to their long/spot positions, suggesting that a visit to this region could confirm that it will further extend its mid-term uptrend.
“Many talking about the double top on the ETH daily chart as a bearish signal. But most double tops fail. In fact, chart-wise, in my book, $290 is a buying/adding spot, not the contrary. I’ll share how so later today as rather busy now,” he explained.
Many talking about the double top on the $ETH daily chart as a bearish signal. But most double tops fail. In fact, chart-wise, in my book, $290 is a buying/adding spot, not the contrary. I’ll share how so later today as rather busy now.
— Alex (@classicmacro) February 19, 2020
How Ethereum trades against Bitcoin in the coming hours will likely shine a light on its current market structure, as further underperformance could suggest it will see some near-term downside before it is able to climb any higher.