Ethereum price has underperformed Bitcoin this year. It has risen by 56%, while Bitcoin has soared by almost 160%.
Ether remains 40% below its highest point this year, while BTC is less than 10% below its all-time high.
Ethereum ETFs inflows, ecosystem challenges
The first main reason why Ethereum is underperforming Bitcoin is that it has had a mild reception by institutional investors.
Data by SoSoValue shows that all spot Bitcoin ETFs have had over $19.7 billion in inflows. The iShares Bitcoin ETF (IBIT) has over $25 billion in assets, while Fidelity’s FBTC has $12.3 billion.
Ethereum ETFs, on the other hand, have not attracted substantial assets from institutional investors. Its cumulative outflows since the approval was over $554 million. The Blackrock Ethereum ETF (ETHA) has $1.09 billion in assets, while the Grayscale Ethereum Mini Trust has $1,09 billion.
Therefore, there are signs that many institutional investors like Citadel, Susquehanna, and Millennium have opted to invest in spot Bitcoin ETFs instead of Ether.
Second, Ethereum has seen substantial outflows from the key players like Vitalik Buterin and Ethereum Foundation. Cumulatively, these individuals and entities have sold tokens worth billions of dollars. In most periods, large whale sales are usually seen as a negative thing since they probably know something that most people don’t know about.
Third, Ethereum has continued to lose market share in key industries like Decentralized Finance (DeFi) and Non-Fungible Tokens (NFT). Data by DeFi Llama shows that Solana’s DEX volume in the last seven days stood at $40 billion, a 416% increase from the previous week.
The volume stood at over $40 billion compared to Ethereum’s $9.15 billion. This growth was mostly because Solana has become the most popular chain for meme coins, including Dofwifhat, Bonk, and Cats in a dog world.
Ethereum’s role in the DEX industry will likely face more challenges when Uniswap launches the Unichain, a layer 2 network that will have faster transaction speeds and low costs. Uniswap is the biggest DEX network on the Ethereum chain.
Ethereum is also facing major competition from other popular layer 2 networks like Arbitrum, Base, and Blast.
On the other hand, Bitcoin scaling networks like Core and Stacks are doing well. Core has a TVL of over $417 million, while Stacks has $102 million. This growth will likely continue after Stacks launches the Nakamoto upgrade later this year.
Ethereum price forecast
ETH chart by TradingView
The daily chart shows that the ETH price has had several red flags in the past few weeks. It formed a double top pattern around the $4,000 level and crashed below its neckline at $2,813, its lowest point on April 30th.
Ethereum has formed a death cross pattern as the 50-day and the 200-day Exponential Moving Averages (EMA) crossed each other.
Most importantly, the token has formed a bearish pennant pattern, a popular risky pattern. It also sits at the 50% Fibonacci retracement level.
Therefore, there are rising odds that the Ether price will have a bearish breakdown as sellers target the next key support at $2,000.
