Key Points
Over the last month, Ethereum (ETH) has not performed as well as Bitcoin and the broader cryptocurrency market, despite rallying to $4,091 ahead of the Dencun upgrade.
This has led traders to question if the altcoin’s downtrend is indeed over.
ETH’s Performance in Context
During the same period, Bitcoin’s (BTC) price saw an 18% decrease, while the total cryptocurrency market capitalization shrank by 16%.
Several market and technical indicators suggest that ETH may experience a deeper correction before embarking on a sustained recovery.
Although Ethereum has seen an 8% increase in March, it has not performed as well as Bitcoin and other top layer 1 tokens.
In the past 30 days, BTC’s price has rallied 21%, while other top-cap layer 1 tokens, such as BNB Chain’s BNB and Solana’s SOL, have rallied 44% and 76%, respectively.
Throughout March, the ETH/BTC ratio has declined, reaching its lowest point since January.
There are several reasons for ETH’s underperformance in March, including factors specific to Bitcoin in 2024.
For instance, U.S. spot Bitcoin ETFs have been largely successful since their approval by the Securities and Exchange Commission on Jan. 11.
Furthermore, the upcoming Bitcoin supply halving, which has historically preceded a parabolic uptrend in crypto prices, has added to BTC’s tailwinds.
There has also been a decline in Ethereum’s network activity over the last week, as shown by data from Glassnode.
Despite Ethereum remaining the leader in the layer 1 sector, Solana has recently captured some of its market share in terms of on-chain activity and stablecoin transfer volume.
Ethereum’s latest recovery attempt was thwarted by supply congestion from the $3,600 level, indicating that this area presents a significant barrier in ETH’s recovery path.
Data from IntoTheBlock reinforces the importance of this resistance zone, which is within the $3,534 and $3,639 price range, where roughly 1.17 million addresses previously bought approximately 4.97 million ETH.
If this resistance level sees a high volume of activity from sellers in the short term, it is expected that Ether’s price will sink deeper.
After hitting a 27-month high of $4,093 on March 12, ETH price pulled back as bears booked profits and the wider crypto market corrected.
A bear flag can be seen on the daily chart, hinting at the continuation of the downtrend, despite the price having since recovered to the current price of $3,511.
Ethereum bulls are counting on support from the flag’s lower boundary at $3,497.
A daily candlestick close below this level would signal a bearish breakout from the chart formation, projecting a decline to $3,060, which would represent a 26% descent from the current price.
The relative strength index’s (RSI) position around 50 also suggests that the bears were selling on the latest rally to $3,600.