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Bitcoin Eyes Further Gains as Ethereum Struggles With Declining Demand

Bitcoin recently achieved a new all-time high, climbing above $109,000 and continuing its strong upward momentum. This performance has further highlighted the disparity between Bitcoin and Ethereum’s price trajectories, with Ethereum underperforming in recent months.

While Bitcoin has captured attention for its resilience and gains, Ethereum faces challenges that have weighed on its progress. According to Percival, a CryptoQuant analyst, the new regulatory clarity provided by the pro-crypto administration in the US is contributing to Bitcoin’s strength.

In contrast, Ethereum’s internal difficulties, coupled with declining demand in the spot market, have created a challenging environment for the asset.

This divergence highlights how the two leading cryptocurrencies are currently moving along very different paths, with Bitcoin thriving and Ethereum struggling to maintain its footing.

Ethereum’s Decline and Market Sentiment

Percival pointed out that Ethereum’s struggles can be seen in several key metrics. Spot market transactions have dropped dramatically since the previous cycle, with current volumes at $8 billion compared to $52 billion during the bull market’s peak in early 2021.

Spot market transactions.

This represents a sharp reduction in demand, signaling that Ethereum’s current bull market participation is significantly diminished. Additionally, data shows that Ethereum has returned to levels seen in 2016, with a majority of trading days now classified as “unprofitable” when compared to Bitcoin.

Ethereum vs Bitcoin price.

These challenges, according to Percival, have prompted concerns that Ethereum may need to establish a “bottom” before it can regain stability. Without this stabilization, investor sentiment could become increasingly volatile, potentially leading to further price declines.

The analyst also suggests that until Ethereum can address its internal issues and rebuild confidence, its underperformance relative to Bitcoin is likely to persist.

Bitcoin Momentum And Market Structure

While Ethereum struggles, Bitcoin continues to benefit from favorable market conditions and positive sentiment. Percival notes that macroeconomic factors, along with increasing regulatory clarity, have positioned Bitcoin for continued growth.

The Choppiness Index, an indicator of market consolidation and trend readiness, currently signals that Bitcoin has built the necessary strength to sustain its upward trajectory.

Bitcoin (BTC) price chart on TradingView

The analyst believes that Bitcoin’s current market structure supports further gains in the coming days. Particularly, after a period of consolidation, Bitcoin appears poised to extend its rally, attracting more investor interest and reinforcing its position as the leading cryptocurrency.

As Ethereum grapples with its challenges, Bitcoin’s steady momentum highlights the stark contrast between the two assets’ market dynamics. However, it is worth noting that it’s not all gloom for Ethereum. According to a recent ポスト from renowned crypto analyst Ali, Q1 might just be Ethereum’s year of sudden rebound.

Featured image created with DALL-E, Chart from TradingView


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