With ETH-BTC Correlation High, Where Can Ethereum be Headed?

At press time, the top altcoin Ethereum exchanged hands at $2,603, noting 1.15% daily and 11.44% weekly losses.

The BTC triggered losses seemed to set another round of sell-offs as the market looked largely bearish, with Bitcoin trading near the $37K mark.

For most of this month, Ethereum attempted to make higher highs but faced two major price pullbacks on February 11 and the most recent one of February 17. Ethereum was in a five-day-long downtrend, and its price dipped to as low as $2580 at press time. 

So, with rising skepticism around the top altcoin’s trajectory, it becomes crucial to look at what drove the recent ETH losses.

High ETH-BTC Correlation

Despite the larger market noting a slight uptick, both the top coins, Bitcoin and Ethereum were below the $40K and $3K mark, respectively. For Ethereum, however, with BTC correlation being high at the moment, the top coin’s short-term trajectory looked shaky. 

Notably, data from Coin Metrics highlighted that ETH-BTC correlation was nearing all-time high values at press time, sitting at 0.902. 

Seemingly, Ethereum and Bitcoin could move in tandem in the short term. Interestingly, while the larger market has been sensitive to BTC moves, ETH has followed Bitcoin dips and upticks. 

Ethereum Could Face Further Downside

Over the last five days, ETH’s price dipped by over 17%, from the high of $3160 on February 17 to the lows of $2600 around press time. Bitcoin saw a close to 14% fall in price and traded at $37,700 at press time. 

A worrying trend displayed by the top altcoin over the last few days was that its price made lower lows. ETH failed to stay above the $2,880 support zone, which led to the price breaking under the $2,750 support level and the 100 hourly simple moving average.

At press time, with the king altcoin’s price around $2600, its entry further into the bearish zone has led to skepticism among ETH traders. 

That said, the price dived to as low as $2,575 on particular exchanges and was now noting minor recovery trading above the $2,650 level. For now, ETH’s next significant price resistance is near the $2,800 level and the 100 hourly simple moving average. 

If, in the short term, ETH can make a move above the $2,800 mark, its price could re-establish itself above the $3K mark.

However, looking at the consolidation and weekly on-chain exchange flow, it could be seen that inflows dominated outflows by +$718.5 million. The same meant that more ETH entered exchanges indicative of minor panic selling. 

Thus with skepticism rising and inflows taking the lead, the top altcoin could witness further downside.