Ethereum’s native token ether (ETH) fell to its lowest level in nearly two months against bitcoin (BTC) as the sell-off in the cryptocurrency market intensified on May 12.
Macro Headwinds Finally Catching Up With ETH/BTC
The ETH/BTC pair was down 7.5% over the past 24 hours at 0.0663. The downside move was part of a correction that started on May 11, when the pair traded at the local high of 0.0768. This pushed the exchange rate of ether against BTC down by 13.75%.
Cryptocurrencies have come under pressure along with the stock market in recent weeks. Notably, fund managers, traders and investors are showing signs of “de-risking” their portfolios amid growing concerns about an increasingly hawkish Fed.
Ether, the second-largest cryptocurrency by market capitalization, has been hit by the same macro headwinds and is currently trading 65% below its all-time high of around $4,870 set in November 2021. Likewise, Bitcoin is down 63% from its all-time high of $69,000 over the same period.
ETH/BTC is showing resilience despite the market downturn in 2022, as Ether’s declines are slightly limited compared to Bitcoin. Nonetheless, the pair is now showing signs of chasing the bearish trend, suggesting more pain ahead.
Rising wedge breaks down in game
ETH/BTC’s latest decline has broken below its prevailing rising wedge pattern, suggesting that the pair’s technical downside target could be well below the local low on May 12.
This is because a rising wedge is a bearish reversal pattern that, when measured from the point of breakdown, usually sends the price down as much as its maximum height.
Therefore, after adding the maximum height of the structure (usually around -0.009 BTC) to the breakdown point of 0.073 BTC, the breakdown target of the rising wedge of ETH/BTC is close to 0.064.
Conversely, ETH/BTC has been testing an upward sloping trendline, labeled “LTF Support” in the chart above, as support since June 2021. As traders gather to buy dips. This prompted ether to rally 3.5% from an intraday low of 0.066 BTC.
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But ETH faces a series of resistance levels as it pursues an upward continuation in the coming days. They include a temporary price cap of 0.069 BTC – defined by the 0.236 Fibonacci retracement chart’s 0.236 Fibonacci line from the 0.087 BTC swing high to the 0.064 BTC swing low, followed by the 200-day exponential moving average (200 day EMA; blue wave) near 0.073 BTC.
Bitcoin’s Market Dominance Hits New Six-Month High
The ETH/BTC slump coincided with the Bitcoin Dominance Index — a measure of Bitcoin’s market share relative to altcoins — climbing to nearly 45% on May 12, its highest level since November 2021. It could also indicate that traders see Bitcoin as a safer bet in the current market turmoil – “digital gold.”
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