Rising Bitcoin demand ahead of its mining reward halving has driven Ethereum prices to two-month lows.
The second-largest cryptocurrency fell more than 16 percent against Bitcoin from its April 18 top.
Traders are trying to gauge the bottom for ETH/BTC amidst the halving FOMO.
Ethereum spot rates have plunged following three weeks of continues sell-off on the back of Bitcoin’s mining reward halving.
The surge in bitcoin’s prices in both spot and derivative markets has driven many alternative crypto tokens down against the benchmark, such as XRP, Bitcoin Cash, and Litecoin. Meanwhile, Ethereum, which is the second-largest cryptocurrency by market capitalization, has plunged more than 16 percent from its April 18 top in the bitcoin-enabled markets.
ETHBTC near oversold levels after three weeks of sell-off | Source: TradingView.com
As on Thursday, the ETH-to-BTC exchange rate fell to its intraday low of 0.0216 sats. At the same time, the pair’s momentum indicator, as shown in the chart above via RSI, dropped to near 30. The level showed that Ethereum stands oversold in bitcoin-centric markets.
The capital flight from Ethereum to Bitcoin started as traders assessed the bullish aftermath of the latter’s mining reward halving. Top traders and analysts, including Simon Peters of the eToro investment platform, predicted that the bitcoin price would rise after the May 12 supply cut, citing similar outcomes from its last two halvings.
The leading analyst told CoinRivet that halving would end up bringing more retail investors into the crypto space. Couple that with mounting global media coverages, bitcoin would emerge a winner in the financial sector.
Traders perceived the optimism as their cue to leap into the bitcoin market before its daily supply goes down from 1,800 BTC to 900 BTC. Many of these traders were holding altcoins, including Ethereum, so they perceivably decided to sell their rival stash for bitcoin, causing an overlong plunge.
“Traders crossed down 0.022 sats support level without any resistancem” noted a popular pseudonymous trader. “Selling volume is also rising as the Ultimate-Crypto-Trading-Strategy (UCTS) indicator shows sell signals across every lower timeframe.”
Ethereum levels to watch | Source: Nico
The trader added that Ethereum could test 0.021 for a potential pullback, the same intraday low that it established today before bouncing upward.
Ethereum Support Juncture
A deeper look into the ETH/BTC daily chart shows that its 0.021-support coincides with a medium-term floor offered by an Ascending Trendline.
ETHBTC in a fakeout mode below the Ascending Trendline | Source: TradingView.com
The pair today broke below the Trendline but did not confirm a breakdown move owing to poor trade volume. As traders increase their exposure to bitcoin – at least until May 12 – the ETH/BTC rate could consolidate sideways, treating 0.0213 as its interim support. Nevertheless, breaking below the level would lead it further lower towards 0.0194 sats.
But a revival in buying mood, driven by a potential post-halving sell-off in the bitcoin market, could lead Etherum to bounce back and test the Trendline as resistance. An extended move upward would set the upside target near 0.227 sats.
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