'Boundaries not breached'. Why Ethereum is losing market share to bitcoin

Experts interviewed by Soft4Bro explained the fall in the Ethereum exchange rate

Experts explained the reasons for the falling price of the leading altcoin and also told how the escalation of the conflict in the Middle East may affect the market

The share of Ethereum (ETH) in the total cryptocurrency market capitalization of $1.09 trillion fell from 18.4% at the beginning of the year to the current 17.8%, according to CoinMarketCap. At the same time, bitcoin's dominance rose from 40 percent to 50.3 percent.

The ETH exchange rate fell below $1.6k and hit its lowest level in almost a month - the asset last traded around $1.5k on Sept. 12. Some of the analysts interviewed by business publications call market participants' disappointment in Ethereum the reason for the growth of ETH share.

In recent weeks, there have been concerns about the growth and prospects of the second most capitalized coin due to a sharp decline in activity and commissions in the Ethereum network, as well as the resumption of growth in the supply of the coin after several months of deflation, writes Bloomberg. The publication also notes that new unrest in the Middle East and the possibility of further interest rate hikes are causing many crypto investors to switch to Bitcoin.

Concerns about centralization on the Ethereum network are also on the rise. The reason for this is the surge in interest in Ethereum staking, according to analysts at JPMorgan. They note that the overall profitability of steaking has decreased, which also negatively affects interest in the coin.

Experts explained to "Soft4bro" why the price of Ethereum is falling, and told how the aggravation of the situation in the Middle East and geopolitics can affect the crypto market and the leading altcoin in particular.

Asset sales by developers
Over the past few days, the rate of the second cryptocurrency has really declined, ETH has lost almost 5% of its value in a week, said Denis Smirnov, a blockchain consultant and cryptocurrency researcher. According to him, this could have been influenced by several factors.

Among the main ones, according to the expert, is the sale of some assets by the Ethereum Foundation. Blockchain developers sold 1.7 thousand ETH on the open market for about $2.7 million.

Such sales have repeatedly had a negative impact on the Ethereum exchange rate - for example, the sale of 15 thousand coins in the spring of this year caused a decline of almost 10% in just a few days, Smirnov recalled. However, in the long term, such events indicate only the pace of development of the ecosystem, in such a way, as a rule, distribute grants for the development of new projects, says the consultant. He specified that at the moment the fund continues to control more than 300 thousand ETH.

Overbought

Meanwhile, Ethereum futures exchange-traded funds, which began trading on U.S. markets in early October, "failed to attract significant volume and stimulate cryptocurrency markets," according to analyst firm Kaiko.

The first Ethereum ETF was the Valkyrie Bitcoin and Ether Strategy ETF (BTF), a bitcoin-combined product. Crypto asset manager Valkyrie has converted its bitcoin futures ETF into a fund that also invests in Ethereum futures. Trading in them on NASDAQ began on Oct. 3.

The launch of Ethereum futures ETFs may have led to the altcoin being overbought by investors or traders, and the product launch was mundane and underwhelming, Bloomberg Intelligence suggests.

Geopolitics

The situation with the aggravation of the situation in Israel and the involvement of more countries in hostilities may push up both bitcoin and Ethereum, believes Andrey Podolyan, CEO of Cryptorg. Moreover, the market can react to geopolitical events very quickly, says the expert.

Traditionally, in times of unstable geopolitical situation, investors prefer to withdraw to safe assets, such as gold, says Denis Smirnov. However, he added that cryptocurrencies have not been such a safe haven asset for a long time, but in the context of global economic instability, when governments may start uncontrollably turning on the printing presses, deflationary assets such as bitcoin and other cryptocurrencies may become an attractive safe haven.

The "sideways" channel

Ethereum has been moving in a large "sideways" channel for two months now, with the upper boundary located around $1.75k and the lower boundary around $1.55k, Podolian points out. He points out that until these boundaries are broken, it is too early to talk about any strong fall or growth. Traders work in this range and it suits them, the expert added.

At the same time, Standard Chartered analysts predicted that the rate of Ethereum could grow more than five times by 2026 - up to $ 8 thousand. And by 2040, the asset may rise to $ 35 thousand, the bank believes.