Bitcoin (BTC) has a good chance of outperforming Ether (ETH) in the short term.
This is the opinion of David Lifshitz, chief investment officer of ExoAlpha, an investment management service based in Paris, according to which Bitcoin’s upside potential in the short term is higher than that of Ether. His prediction is based on a recent change identified in the BTC / ETH ratio.
More precisely, BTC / ETH compares the trend momentum of Bitcoin and Ether. A lower value suggests that the price of Bitcoin is rising slower than that of Ether. Conversely, a higher BTC / ETH ratio indicates that Bitcoin’s price momentum is ahead of that of Ether.
Recently, Ether appears to be an amplified version of Bitcoin: when the price of BTC / USD plotted a rise, ETH / USD rallied with higher margins. Likewise, when BTC / USD recorded a correction, ETH / USD collapsed more significantly.
The difference between the momentum of the two prices pushed the BTC / ETH ratio into a descending range. By doing so, the report offered traders a way to gauge which of the two assets (Bitcoin or Ether) will produce better profits in terms of relative strength in the short term. Lifshitz commented:
“At the current level, the report suggests that BTC is undervalued relative to ETH, so a shrewd trader could buy Bitcoin and sell Ethereum in the same dollar proportions, betting on the ratio’s potential to rebound from the lower end of the range to the upper end, for then reverse the bet when the ratio approaches the upper limit. “
The relationship flattens out after Musk’s breakdown
The comparison between Bitcoin’s and Ether’s price momentum emerged Wednesday as US Federal Reserve officials announced plans to raise interest rates in 2023, one year ahead of forecast.
Bitcoin and Ether’s first reaction to the news from the Fed was negative. BTC / USD ended the day with a loss of 4.51%, while ETH / USD lost 6.91%. By comparison, on May 19, after Elon Musk’s anti-Bitcoin tweets, BTC / USD plummeted by 14.29% and ETH / USD by 27.61%.
The data indicate that the drastic difference between Bitcoin’s and ETH’s price momentum began to decline after the May 19th plunge. Lifshitz sees this as a further sign that Bitcoin will outperform Ether:
“Over the past three weeks, the relative BTC / ETH price ratio looks flat. If we take a closer look at the last few days the ratio is going up, so BTC tends to become more valuable than ETH. “
Furthermore, Lifshitz recalled that a relief rally in BTC / USD will fail to offset the pressure of the downtrend channel. Hence, the ratio may continue to decline after hitting the upper end of the range.
Setup per Bitcoin e Ether
The extent of the upcoming Bitcoin and Ether trends, whether they are bullish or bearish, depends on their technical and fundamental factors.
According to Lifshitz, Bitcoin, currently stuck in the range of $ 33,000 to $ 39,000-$ 40,000, it will need to rise above $ 42,000 to confirm a near-term bullish trend. In this scenario, the leading cryptocurrency could hit $ 50,000, which coincides with local lows on April 26 and May 12.
However, the bullish move will only occur if Bitcoin miners stop their selling pressure or are convinced they can sell their BTC reserves in the future at higher prices. Meanwhile, correction buyers and institutional investors, such as MicroStrategy, will provide further bullish push towards the $ 50,000 target.
“And of course, in the midst of this battle between bulls and bears, is Elon Musk’s tweet factory, one in favor of Bitcoin and the next one against, shaking the price every time,Lifshitz emphasized.
As for Ether, Lifshitz expects the cryptocurrency it will hit $ 2,850 in the next few sessions, price touched on May 3 before taking off towards its all-time high. The same level acted as resistance as ETH tried to fully recover from its low of May 19th.
The Ether bulls continue to collide with a symmetrical triangle, which seeks to force prices down. Symmetrical triangles are continuation patterns, so they tend to push prices in the direction of previous trends.
“As the price approaches the apex of the triangle, I expect a new trend, bullish or bearish, from the $ 2,500 level.Lifshitz explained.
Meanwhile, an important factor in the Bitcoin and Ether charts is their volumes. BTC / USD experienced higher trading volumes after the May 19th plunge, while those of Ether remained roughly the same.
“This supports the potential reversal of momentum between Bitcoin and Ether,”Highlighted Lifshitz.