Is Ethereum dying? Bitcoin eyes $100,000 while ETH struggles under $3,500

Ethereum (ETH) lost three years of support against Bitcoin (BTC) as the most prominent cryptocurrency surged towards the $100,000 target on Friday, November 22. ETH faced sticky resistance at $3,500 for nearly four months as its rivals hit record highs this cycle.

Ethereum falls out of favor with institutional investors, ETF performance is poor

Ethereum fell to 0.03187 against Bitcoin on Friday, November 22. While Bitcoin is moving towards the $100,000 target, Ethereum price has fallen below the support level that has been maintained for nearly three years since 2021.

Ethereum’s decline versus Bitcoin is likely a result of several factors, including apathy from institutional investors, a steady decline in interest from retail investors, and a shift of capital and attention to Layer 2 and Layer 3 scaling projects, among others.

The performance of the Ethereum Spot ETF explains how the altcoin has failed to garner investment from institutions while the Bitcoin Spot ETF continues to outperform.

Data from Farside Investors UK shows that ETH ETFs have recorded net negative inflows or outflows over the last six days. In contrast, Bitcoin Spot ETFs continue to attract billions of dollars in institutional fund flows.

Ethereum ETF flows | Source: Farside Investors

Adamant Research Editor-in-Chief Tuur Demeester told Forbes that Ethereum may be “heading for a slow death,” signaling a shift in market dynamics and a slowdown in institutional adoptions.

Solana challenges Ethereum dominance and on-chain analysis

The altcoin faces challenge from rival Solana (SOL) as Ethereum ETF performance struggles. According to CoinGecko, Solana’s market cap increase and price rise have pushed SOL into the top four cryptocurrencies.

Best cryptocurrencies by market cap | Source: Coingecko

Solana dominates Ethereum in terms of trading volume on decentralized exchange platforms, DEX activity, and protocol fees generated in October 2024 and November 2024.

While Ethereum’s price rose on Thursday and Friday this week, the altcoin is struggling with the $3,500 resistance and a failure to surpass this level could challenge the token’s chances of further gains.

On-chain measurements are inconclusive. Although active addresses remain well below mid-August 2024 levels, the funding rate on Binance has been consistently positive since mid-September 2024.

Open interest in Ethereum futures, a metric that measures interest and demand among derivatives traders, rose to $10.35 billion, according to Santiment data. Statistics obtained from derivative markets support the bullish thesis for the altcoin. Coupled with the recent rise in Ether price, further gains are likely if the altcoin successfully surpasses the $3,500 resistance.

Ethereum price and active addresses, binance funding rate, total open interest in USD | Source: Santiment Bitcoin leads cryptocurrencies with digital gold narrative

Ethereum is the second largest altcoin, and for the better part of the last decade, the two cryptocurrencies have been mentioned together by analysts and traders. However, Bitcoin has stepped into the role of “digital gold” or a token used to hedge against geopolitical crises and unpredictable events in the market. At the same time, Ethereum faces scalability issues.

Ethereum’s scalability issues have given way to Layer 2 and Layer 3 protocols, and their tokens should deliver returns for investors in 2024. But the basic chain is gradually losing its attractiveness and attractiveness among market participants.

While the digital gold narrative has attracted institutional attention from nations that have seen fit to add Bitcoin to their balance sheets, Ethereum is still working on its promise of becoming a “decentralized computer” to the world.

Even though Ethereum has a larger market cap than Bank of America, as of November 22, the altcoin is yet to witness an increase in the current market cycle compared to other cryptocurrencies such as meme coins and Solana.

Ethereum’s future prospects and technical analysis

ETH/BTC has fallen to an almost three-year low and a critical support level, as seen in the chart below. The decline is significant and the pair has been in a downward trend since September 2023.

Technical indicators such as the relative strength index and momentum indicators support the bearish thesis. The RSI 31 is close to the “oversold” zone below 30. This often creates a buy signal for investors, meaning the asset is undervalued and for investors on the sidelines, it’s a good time to buy.

Failure to recover from the support level could lead to further declines in the pair and ETH/BTC could fall further in the next few weeks of 2024.

ETH/BTC weekly price chart | Source: Crypto.news

The ETH/USDT daily price chart shows positive signs for the altcoin. If the altcoin maintains its bullish momentum, ETH price could post gains and rally towards the $3,500 resistance and the May 2024 high of $3,977.

Ethereum is less than 5% away from $3,500, and a gain of around 20% could see ETH test the May 2024 peak of $3,977. The RSI 65 is well below the overvalued level above 70. The green histogram bars on the moving average convergence divergence indicator support the possibility of further gains in Ethereum.

Ethereum’s underlying price trend is positive, and if the altcoin continues its steady rise, the psychologically important price level of $4,000 could be surpassed in the short term.

ETH/USDT daily price chart | Source: Crypto.news

A correction could send Ethereum testing the $3,000 level, a key support level for the altcoin throughout 2024. Further declines could mean Ethereum finds support at the lower end of the range at $2,111, as seen on the daily price chart.

Strategic considerations

According to Macroaxis.com, Ethereum has a strong correlation with Bitcoin at 0.91. This means that a significant increase in Bitcoin price may be followed by gains in Ethereum, and the altcoin price is expected to observe a positive impact.

While Ethereum lags compared to its peers, a correction in Bitcoin could increase the difficulties the altcoin faces in its tough fight against the $3,500 resistance. Traders need to monitor options volume and open interest in Ethereum before adding to their positions in ETH.

Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.