Ether (ETH), Ethereum’s original cryptocurrency, failed to break again with Bitcoin (BTC): BTC / USD rose more than 8% on March 18.
There are two possible reasons why the ETH / BTC pair has not managed to break an important level of resistance.
First, BTC rose sharply as a result of a brief push after most of the market has been short in recent days, beating most of the alternative cryptocurrencies.
Second, the overall risk-adjusted macroeconomic outlook in the market is deteriorating due to the sharp rise in the 10-year US government bond yield, which peaked at 14 months at 1.75%. This could put further pressure on the sale of altcoins, which have less volume and liquidity than BTC.
ETH was rejected at a large level despite the network’s positive results
According to a trader under a pseudonym known as “Trader XO”, ETH is rejected at a large level on the ETH / BTC chart.
The trader emphasized that ETH should remain above its lower support zone of 0.029 BTC in order for the short-term bullish market structure to remain unchanged.
If ETH bounces down $ 1,720 for the ETH / USD pair, the rally is likely to continue. He said:
“$ ETH – rejected in the middle as expected. Ideally we want to keep the minimum here. It’s okay to deviate from the downturns anyway – it will give me more confidence to jump into #Ethereum. Wait patiently for the structure to form. Before you jump in. More to the side at the beginning. ”
Despite the decline in ETH / BTC, analysts say that basic calculations and data points in the Ethereum chain are still very optimistic.
Ethereum analyst and investor under the pseudonym DCinvestor has indicated that the upcoming EIP-1559 proposal and Staking (PoS) on Ethereum will make ETH even scarcer.
These two factors, combined with declining stock market ETH holdings, as previously reported by Cointelegraph, generally create optimistic prospects for ETH in the medium term. The analyst notes:
With the release of EIP-1559 and Proof of Stake, it is possible that the dollar offer to ETH does not exceed 120 million tokens, which is a very small amount, given how ridiculously useful it is, it is about 5.7 times more than $ 21 million Bitcoins. But it is stable and reports about 20 times. As programmable means and guarantees. ”
Macro scene, Treasury returns are still an issue
The 10-year US government dividend yield was probably the main catalyst for the weakening of Bitcoin and ETH over the last 12 hours, as shown in the chart below, which is an inverse correlation.
Portfolio managers and strategists have expressed concern about the overheating of the bond market and its potential negative impact on the risk market.
Hinesh Patel, portfolio manager at Quilter Investors, said:
While a lack of response at this point may be the only suggested step, no matter what Powell does at this point, the Fed is putting bond markets in jeopardy. If they do nothing, the bond market will continue to raise interest rates in search of the best. The federal government should increase or adjust bond purchases, while if it acted now, it would be accused of overstimulation and hyperactivity. ”
Bitcoin, Ethereum and the rest of the crypto market can be disconnected from the risk and stock markets. Ideally, however, the US cryptocurrency market Treasury returns should stabilize to see a steady upward trend in the short term.