Ethereum on the abyss: Historical decline and growing competition endanger the future of the second largest cryptocurrency

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Ethereum under pressure: Does the downward trend continue?

The second largest cryptocurrency, Ethereum (ETH), has been showing a considerable weakness towards Bitcoin (BTC) for some time. The ETH/BTC chart lost around 53 percent last year and is currently at 0.022 BTC-the lowest level since May 2020. The long-term trend has been even more worrying, since a remarkable decline of around 85 percent has been recorded in June 2017. This is a downward trend that continues to last for almost eight years.

With a relative strength index (RSI) of 23.32 in the two-week ETH/BTC chart, the situation becomes even more critical. An RSI value below 30 usually indicates an oversized market situation that signals a potential recovery. In this case, however, the RSI does not seem to find soil and continues to fall, which indicates that the downward movement remains. The crypto analyst Alessandro Ottaviani aptly describes this scenario as a "falling knife", a term that stands for a quick drop in price.

technical analysis

Critical support at 0.022 BTC plays a crucial role. If this support breaks, ETH could fall to 0.016 BTC, which means a decline of up to 30 percent. However, if Ethereum is able to defend the 0.022 BTC brand, a potential recovery remains up to 0.038 BTC, even if the downward risks continue to predominate.

fundamental challenges for Ethereum

In addition to the technical indicators, there are also fundamental causes of the weakness of Ethereum. Again and again the second largest cryptocurrency is put under pressure by the competition in the form of other Layer 1 blockchains such as XRP, Solana and Cardano. These projects gain market shares and seem to reduce the previously existing "First Mover Advantage" from Ethereum. One example is Solana, which regularly records higher trading volumes on decentralized stock exchanges as Ethereum.

Another factor that complicates the situation for Ethereum are the Bitcoin ETFs that disturb the previously used pattern of the market cycle rotation. While Bitcoin's price gains in Ethereum and smaller old coins flowed quickly in earlier cycles, this capital rotation seems to have been broken in the current market phase. Another crisis point was the recent Bybit hack, in which North Korean Hacker Ethereum, worth $ 1.4 billion, stole. This led to considerable uncertainties and liquidations among ETH investors.

rumors about the risk of liquidation of the Ethereum Foundation

In addition to these challenges, there were recently rumors about an alleged risk of liquidation by the Ethereum Foundation. Analyzes from Lookonchain showed that a suspect Wallet 30,098 ETH (approx. 56.08 million USD) had deposited in Makerdao to reduce the liquidation price. A total of 100,394 ETH (approx. 182 million USD) were stored as security, which fueled speculation about a lack of financing from the Ethereum Foundation.

However, an analysis by Arkham Intelligence made it clear that the wallet in question cannot be directly assigned to the Ethereum Foundation. Rather, it is an early ETH investor that has made transactions with the foundation in the past. This clarification brings the all -clear, at least for this special matter.

conclusion - Ethereum remains susceptible

Overall, Ethereum remains under pressure both technically and fundamentally. The long -standing downward trend compared to Bitcoin continues, and a break of the support at 0.022 BTC could lead to a further decline to 0.016 BTC. While a recovery is theoretically possible, the downward risks predominate.

Ethereum loses market shares to growing competitors such as Solana and Co., while external events such as the Bybit hack cause additional uncertainties. Although the risk of liquidation of the Ethereum Foundation proved to be a false alarm, the structural problems continue to exist. Without a clear reversal of trends, ETH remains susceptible to further losses.