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Ethereum (ETH) Just Broke A Critical Support Against Bitcoin (BTC)

 
Ethereum (ETH) Just Broke A Critical Support Against Bitcoin (BTC)
Ethereum / Breaking News / Bitcoin / Analytics

Ethereum (ETH) just broke below a critical support level against Bitcoin (BTC). This is a bearish development not only for ETH/BTC but also for the rest of the altcoin market. This means that Bitcoin (BTC) dominance is now expected to keep on rising and Ethereum (ETH) as well as other altcoins might experience a lot of pain when Bitcoin (BTC) begins its downtrend considering altcoins fall a lot harder than Bitcoin (BTC) during most downtrends. The altcoin market has become quite overcrowded with useless tokens over the years but we have yet to see some cleansing. Until now, during every bull run, we would see most altcoins rally regardless of how good or bad they were and if they had any value at all. However, this time the market seems to have realized that even altcoins like Ethereum (ETH) may be overpriced at the moment as investors flock towards Bitcoin (BTC).

There are two reasons investors are more comfortable holding Bitcoin (BTC) compared to Ethereum (ETH) or other altcoins. First of all, Bitcoin (BTC) has a fixed supply. There will only be 21 million Bitcoin (BTC) in existence. This mustn’t be taken as a sign to buy though because markets follow cycles and the whales and big players use such narratives to trap in overly optimistic retail traders. So, the first reason investors are comfortable holding BTC over ETH is because they see it has a fixed supply and it is a better store of value. The second reason investors are comfortable holding Bitcoin (BTC) is because it can be more easily converted to fiat if the proverbial hits the fan. A lot of traders might not say this out loud but this what most of them feel deep down because they know that this rally cannot go on forever. So, when the market starts to decline, they are going to want to be holding an asset that has higher liquidity and can be easily sold to fiat.

Altcoin dominance received a terrible blow when it closed below the 200 Week EMA. Since then it has continued to decline and we expect it decline all the way to 0.8 towards June 2020 when Bitcoin (BTC) will experience its next halving. Ethereum (ETH) and other altcoins are also likely to lose most of their ground more than Bitcoin (BTC) because a lot of traders are going to want to profit off Bitcoin (BTC)’s next halving. This will put further pressure on altcoins and they will end up breaking critical supports against Bitcoin (BTC).

Investors’ faith in altcoins is fading away as they have continued to face disappointment over the past few weeks when BTC/USD has continued to outperform most large cap altcoins. This disappointment will intensify when altcoins fall a lot harder than Bitcoin (BTC) during the next downtrend. Ethereum (ETH) and other altcoins will see double digit declines soon as the next downtrend begins. When the market finally bottoms out, it would not be surprising to see another altcoin replace Ethereum (ETH) as the second largest coin by market cap.

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