ETH Faces Potential 10% Drop Against BTC Even as Staking Reaches All-Time High
With Ethereum's staking ratio hitting an unprecedented 32.33%, the reduced liquid supply could diminish selling pressure and lay the groundwork for ETH price appreciation in the future.
Over the last week, Ether (ETH) has experienced approximately a 5.5% decline in value relative to Bitcoin (BTC), and a bearish technical pattern now suggests the potential for additional losses in the coming period.
Key takeaways:
- A bear flag formation in the ETH/BTC pair indicates a potential 10% decline to 0.026 BTC during May.
- A record-breaking 32.33% staking ratio for Ethereum is constraining the available liquid supply.
Bear flag formation suggests 10% decline for Ether
Since February, the ETH/BTC ratio has been developing a bear flag configuration, moving within a rising parallel channel following a steep downward movement.
Within technical analysis, bear flag formations are generally recognized as continuation patterns. Technical analysts calculate the potential downside by measuring the height of the preceding decline and extending that distance downward from where the price penetrates below the flag's lower boundary line.
Applying this methodology, the calculated downside objective for the ETH/BTC pair lands around 0.026 BTC, representing approximately 10% below present price levels, with expectations for May.
It's worth noting that a comparable bear flag breakdown that occurred earlier in the year resulted in a decline of roughly 15%, indicating the present formation could similarly advantage Bitcoin relative to Ether in the short-term outlook.
On the other hand, the bearish breakdown scenario might be delayed should ETH/BTC bounce upward from the flag's lower boundary line, creating the possibility for a climb toward the upper edge near 0.032 BTC during May.
Record highs achieved in Ethereum staking ratio
Despite ETH's continued underperformance compared to Bitcoin, Ethereum's underlying fundamentals are showing improvement.
On April 21, the network's staking ratio achieved an all-time high of 32.33%, with approximately 39 million ETH secured across 816,578 validators, based on information from data resource Token Terminal.
This represents approximately $90.26 billion in total staked value and signifies the first occasion where more than one-third of Ethereum's available circulating supply has been dedicated to securing the network.
In the earlier part of this month, the Ethereum Foundation successfully achieved its 70,000 ETH staking objective, reallocating a greater portion of its holdings toward yield-producing positions rather than maintaining them as potential sell-side inventory.
At the same time, BitMine Immersion Technologies currently possesses 4.976 million ETH, representing 4.12% of the total supply, with approximately 3.334 million ETH already committed to staking via its validator infrastructure.
The cumulative effect of these developments means a smaller amount of ETH remains accessible for active market trading. This dynamic has the potential to decrease selling pressure and provide support for prices measured in dollar terms over extended periods, particularly if demand continues its upward trajectory while the available supply continues contracting.
The underperformance of Ether compared to Bitcoin can be attributed in part to the erosion of Ethereum's "ultrasound money" narrative, whereas Bitcoin continues reaping benefits from accumulation activities by companies like Strategy and its growing incorporation into institutional Wall Street investment portfolios.