Why Ethereum's Price is Struggling
Bitcoin and Solana are making life difficult for Ethereum. These charts illustrate why ETH is currently struggling compared to its competitors.
For months, Bitcoin has dominated the crypto sector's narratives, whether due to ETFs or the recent halving. Ethereum and other altcoins have been overshadowed by BTC, as evidenced by the increased Bitcoin dominance in chart analysis.
In this context, Ethereum's underperformance is also evident in the ETH/BTC chart, which measures ETH's performance relative to Bitcoin. It's clear that the trend has been downward since the Proof-of-Stake update in 2022. The last significant rally Ethereum experienced was during the DeFi summer in May 2020, until the peak of the last bull market in November 2021. This shows that Crypto Number Two lacks a strong narrative in this bull market.
Solana is gaining ground
However, it's not just the distance to the leader that's growing – Solana has also been closing the gap with Ethereum's largest competitors since 2023. As seen in the following chart, SOL has reached a new all-time high against ETH in recent months. In other words, ETH has set a new all-time low against SOL. This is despite Solana being almost written off after the FTX collapse. ETH is now at critical support levels. If these break, it could lead to a further decline in the short term for the second-largest cryptocurrency.
While it's uncertain whether Solana will eventually surpass Ethereum, a temporary coexistence is the most likely scenario. This would result in Ethereum losing significant market share. Solana's DeFi sector, for example, is increasingly attracting funds, and the network has been outperforming Ethereum in terms of activity.
To regain its competitive edge, Ethereum needs a new innovation that increases demand and sets it apart from other technologies.
Disclaimer: The contents presented in this article are for informational purposes only and do not constitute investment advice.
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