ETH Faces Potential 10% Drop Against BTC Even as Staking Reaches All-Time High
Despite Ethereum achieving an unprecedented staking ratio of 32.33%, which is reducing available supply and selling pressure, ETH could see gains in value over the long term.
Over the last seven days, Ether (ETH) has experienced approximately a 5.5% decline when measured against Bitcoin (BTC), with a bearish technical formation now suggesting the possibility of additional downward movement.
Key takeaways:
- A bear flag formation on the ETH/BTC chart suggests a potential decline of 10% to the 0.026 BTC level during May.
- Ethereum has achieved an all-time high staking ratio of 32.33%, which is reducing the available liquid supply.
Bear flag formation threatens Ether with 10% decline
Since February, the ETH/BTC trading pair has been developing a bear flag formation, moving within an ascending parallel channel following a steep downward trajectory.
Within the realm of technical analysis, bear flags typically represent continuation patterns. Technical analysts calculate the potential downside by measuring the height of the prior decline and extending that distance downward from the breakout point beneath the flag's lower boundary line.
Applying this methodology, the projected downside target for the ETH/BTC trading pair sits around 0.026 BTC, representing approximately a 10% drop from present price levels, potentially materializing in May.
It's worth noting that a comparable bear flag breakdown that occurred earlier during the current year led to approximately a 15% price decline, indicating that the present technical formation might again show Bitcoin outperforming Ether in the coming weeks.
On the flip side, this bearish breakdown scenario could be delayed should the ETH/BTC pair manage to bounce upward from the flag pattern's lower trend line, which would create the possibility for a rally toward the upper boundary around 0.032 BTC during May.
Ethereum's staking ratio achieves unprecedented heights
While ETH continues to underperform relative to Bitcoin, Ethereum's underlying fundamentals are showing improvement.
According to data resource Token Terminal, the network's staking ratio reached an all-time high of 32.33% on April 21, with approximately 39 million ETH secured across 816,578 validators.
This represents approximately $90.26 billion in total staked value and signifies the initial instance where over one-third of Ethereum's available circulating supply has been allocated to securing the network.
In early April, the Ethereum Foundation achieved its goal of staking 70,000 ETH, converting a larger portion of its treasury into positions that generate yield rather than maintaining holdings that could potentially create selling pressure.
In addition, BitMine Immersion Technologies currently possesses 4.976 million ETH, representing 4.12% of the total supply, with approximately 3.334 million ETH already committed through its network of validators.
Collectively, this indicates that a smaller amount of ETH remains accessible for regular trading activity. This dynamic has the potential to diminish selling pressure and provide support for dollar-denominated prices in the future, particularly if market demand continues growing while the accessible supply continues contracting.
Ether's underperformance relative to Bitcoin can be attributed in part to the diminishing strength of Ethereum's "ultrasound money" narrative, whereas Bitcoin continues enjoying accumulation by corporations like Strategy and its expanding adoption within Wall Street investment portfolios.