Is a 30% Bitcoin Crash on the Horizon?

The native token of Ethereum, Ether (ETH), has fallen to its lowest levels in several years against Bitcoin (BTC), leading analysts to forecast further declines in the weeks to come.

Warning of a Falling Knife Increases Sale Risks

On March 13, the ETH/BTC pair—used to gauge Ether’s performance relative to Bitcoin—declined by over 1.50%, hitting $0.022, marking its lowest point since May 2020.

ETH’s decline is part of a prolonged downtrend that began after it peaked at $0.156 in June 2017. Since that time, it has dropped by more than 85%, indicating an increasing weakness of Ether against Bitcoin.

On the two-week ETH/BTC chart, the relative strength index (RSI), a momentum gauge that helps determine if an asset is overbought or oversold, has reached an unprecedented low of 23.32.

Generally, when the RSI falls below 30, it indicates oversold conditions that could trigger a price rebound.

However, in Ethereum’s situation, the RSI continues to decline even after two months of being in oversold territory, suggesting that ETH’s downtrend is accelerating rather than showing signs of stabilization.

Crypto analyst Alessandro Ottaviani characterized the environment as a “falling knife” scenario—describing an asset experiencing a sharp and swift decline, which often deters buyers from entering too early.

A falling knife suggests that trying to buy in at what seems like a low point could result in further losses if the downward trend continues.

For Ethereum to indicate a possible reversal, traders will be monitoring for stabilization in the RSI and a reclaiming of critical resistance levels. This ideally starts with a bounce from the 0.022 BTC mark, which previously contained ETH/BTC’s downside attempts in December 2020, leading to a significant 300% surge.

If a rebound occurs, the ETH/BTC pair could aim for its 0.382 Fibonacci retracement line, located around 0.038 BTC, which aligns with the 50-week exponential moving average (50-week EMA; the red wave).

Until then, the technical outlook indicates that ETH/BTC may continue on its falling knife trajectory, with potential downside targets at historical support levels within the 0.020-0.016 BTC range.

The lowest point of this range is around 30% lower than current price levels.

ETH/BTC Fundamentals Support a Bearish Outlook

The prospects for Ether declining further against Bitcoin are influenced by factors beyond mere technical analysis.

For example, Ethereum is currently facing intense competition from other layer-1 blockchains like Solana (SOL).

Related: ‘The worst thing that happened to Ethereum’ — Bitcoin up 160% since the Merge

VanEck has noted that Solana’s decentralized exchange volumes have even surpassed those of Ethereum during a significant drop in memecoin trading. Meanwhile, Solana’s trading volume has increased steadily over recent months, contrasting with the decline in Ethereum’s volumes.

Additionally, the launch of spot Bitcoin ETFs has fundamentally changed the traditional cryptocurrency market cycle that used to favor Ethereum and other altcoins.

Historically, capital would flow into altcoins after Bitcoin’s post-halving surge, sparking an “altseason” where ETH and other assets outperformed BTC. However, the $129 billion inflows into Bitcoin ETFs in 2024 have disrupted this cycle, siphoning liquidity from the broader altcoin market, including Ethereum.

Another factor contributing to this situation is Ethereum-specific selling pressure.

The recent Bybit hack reportedly resulted in significant ETH liquidations, with a portion of that value laundered through decentralized platforms such as Thorchain. This absorbed sell-off may still be reverberating through the market, impacting ETH’s relative value.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.