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Market Direction

Is Ethereum's underperformance a bullish or bearish sign?

Updated: Aug 31, 2024
Published: Oct 27, 2023
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ETH still has some positive aspects, but it just can’t seem to get going and continues to underperform against BTC.  

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TLDR

  • ETH is struggling to keep pace with Bitcoin BTC despite some positive attributes.
  • Technical analysis indicates a key resistance zone for ETH at $1,823 to $1,853, with support at $1,785 and $1,745.
  • While ETH's RSI is in overbought territory, it's not as overheated as other coins, suggesting potential for a retest of the mid-$1,800s.
  • ETH's funding rates are positive, indicating healthy market conditions, but leverage usage is relatively low. 
Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.

Technical analysis

The key resistance level we identified for ETH is the $1,823 to $1,853 area. ETH has rejected twice in that zone where inverted hammer candles have formed. 

ETH has found some support on the 200D MA, which is at $1,785, and it also has a significant horizontal support below it at $1,745. 

Overall, ETH has looked quite weak, particularly when you compare how Bitcoin and other major altcoins have moved. If BTC cannot make another move higher or even just hold at the $34k level, ETH may experience a more significant pullback than BTC. This is because ETH has underperformed overall, and market participants may lose confidence in it. 

ETH 1D

Is Ethereum a buy or sell now?

RSI and funding rates

The RSI is still in overbought territory but only just, so this is nowhere near as overheated as other coins such as BTC, SOL, and LINK. There are no divergences we need to be aware of currently. The RSI suggests that if BTC can hold up, ETH can have another retest of the low to mid $1,800s. 

Regarding funding rates, ETH’s is currently very positive, but there isn’t much open interest, which suggests that not much leverage is being taken out. This is a relatively healthy position in terms of Funding for ETH. 

Cryptonary’s take

ETH has underperformed BTC, so the fear here would be that if BTC cannot sustain the $34k price level, ETH will likely pullback further than BTC. 

If price does pullback in the coming weeks/months, the $1,500 to $1,600 area for ETH will offer a very good long-term buying opportunity. That said, we see the potential bull market top being north of $8,000 per ETH. 

Action

  • ETH’s performance has been weak. We would wait on further price pullbacks before taking long-term positions. 
  • However, it does remain the case that ETH’s current price is far lower than the potential bull market top. 
  • If BTC does break higher, ETH may be the coin to buy in the hope that it’s just lagging BTC and will eventually catch up after BTC takes a breather.

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