Ethereum’s native token, Ether (ETH), has recently slipped below a crucial support level against Bitcoin (BTC), raising concerns among top analysts about its future prospects. The ETH/BTC pair breaking this long-standing support has prompted speculation that Ethereum might be “dying a slow death.”

Historical Support Breakdown

Since 2016, the ETH/BTC pair has consistently bounced back from an ascending trendline, which has marked significant market bottoms and led to substantial rebounds. For instance, between January 2017 and May 2017, ETH/BTC surged by an impressive 1,800%, and from December 2020 to December 2021, the pair saw a 300% recovery. However, in November 2024, Ethereum bulls failed to defend this key support level, resulting in ETH/BTC dropping by approximately 15% below it, accompanied by a surge in trading volumes.

The breakdown of this support level amid increasing trading activity signals strong selling pressure. In technical analysis, losing a significant support level often leads to further declines, suggesting that ETH/BTC may continue to drop in the coming weeks.

Factors Contributing to ETH’s Decline

Several factors have contributed to ETH’s underperformance in 2024. The launch of spot Bitcoin exchange-traded funds (ETFs) in the United States has boosted Bitcoin’s appeal among retail and institutional investors, drawing capital away from Ethereum. Moreover, Ethereum’s own spot ETF has underperformed, exacerbating the capital shift.

Additionally, the growing adoption of Ethereum’s top smart contract rival, Solana (SOL), has played a significant role. Since December 2022, the SOL/ETH pair has surged by over 925%, indicating a strong preference for Solana over Ethereum among investors.

Political factors have also influenced Ethereum’s market position. During Donald Trump’s election campaign, he hinted at making Bitcoin a strategic reserve asset for the United States, completely overlooking Ethereum. This lack of political endorsement has further weakened Ethereum’s position in the market.

As a result of these combined factors, Ethereum’s market dominance has plummeted, reaching its lowest level since April 2021.

Technical Analysis: A Grim Outlook

Chart technicals paint a grim picture for ETH/BTC, which has entered the breakdown stage of its prevailing inverse cup-and-handle (IC&H) pattern. This pattern is characterized by a rounded top, signaling a loss of momentum in an uptrend, followed by a smaller upward consolidation before resuming a downward move.

An IC&H pattern typically resolves after the price breaks below the common neckline support and drops by the distance between the cup’s peak and neckline. Applying this scenario to ETH/BTC suggests a downside target of 0.017 BTC by the end of 2024, marking a 50% decline from current levels.

Conversely, a strong rebound from the current support level of around 0.0317 BTC — coinciding with the 0.786 Fibonacci line — could invalidate the IC&H pattern, potentially sending the pair toward 0.043 BTC by the end of 2024.

Conclusion

Ethereum’s recent performance and the breakdown of its key support level against Bitcoin have sparked concerns about its future. With various factors contributing to its decline, including increased competition from Solana and the political landscape favoring Bitcoin, the outlook for Ethereum appears bleak. As technical indicators point towards a further 50% drop, Ethereum faces a challenging road ahead. Investors and market participants will need to watch closely for any signs of a potential rebound or further decline.