The %Ethereum (CRYPTO: $ETH) to %Bitcoin (CRYPTO: $BTC) ratio has fallen to its lowest level since April 2021, a bearish sign that indicates investor interest in the two largest cryptocurrencies is declining.
The preference has swung towards Bitcoin, with analysts saying that investors continue to see BTC as the most stable and lucrative cryptocurrency.
Analysts say the bearish signal is likely to worsen this autumn unless there’s a significant change in investor sentiment towards riskier assets such as crypto.
The Ethereum-Bitcoin ratio represents the trading of ETH against BTC on %Cryptocurrency exchanges around the world.
In the last five years, the Ethereum-Bitcoin ratio has largely risen as the value of Ether quadrupled relative to Bitcoin.
However, Ethereum’s price has steadily declined this year, a situation that has only worsened since spot Ether exchange-traded funds (ETFs) began trading this summer.
At $2,350 U.S. per token, Ethereum’s price is flat this year (up 0.19%) compared to a 34% year-to-date gain in Bitcoin, which is currently trading at $59,000 U.S.
In March of this year, Bitcoin’s price hit an all-time high of just under $74,000 U.S., while
Ethereum is trading 52% below its record high set in 2021 when the crypto market last peaked.
The slump in the Ethereum-Bitcoin ratio is taken as a bad sign as traders view a preference for Ethereum as beneficial for riskier assets and smaller cryptocurrencies.
A preference for Bitcoin is seen as more risk averse on the part of investors who are seeking stability.
The current preference for Bitcoin has also been fueled by institutional investors clamouring to buy spot BTC ETFs, say some analysts.
Ethereum ETFs have recorded net outflows of $580 million U.S. since they started trading in July of this year.
There is hope that lower interest rates in the U.S., which are expected in coming months, will boost investor sentiment towards crypto.
Lower interest rates are seen as favouring riskier assets such as digital coins and tokens.