The value of Ether (ETH), the native token of Ethereum, has been trading at a 15-month low against Bitcoin (BTC) since Ethereum switched to proof-of-stake (PoS).
Cointelegraph takes a closer look at some of the potential causes for the continuous decline in the ETH/BTC pair.
Web 1.0 vs Web 2.0 vs Web 3.0
The advent of Web 3.0 has brought with it a host of new technologies such as decentralized finance (DeFi), non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs) and more. These technologies have the potential to revolutionize the way we make money and interact with the web, and could be the future of the internet.
Difference between Web3 and Web 3.0
It is important to note the difference between Web3 and Web 3.0. Web3 is the underlying technology that powers Web 3.0, while Web 3.0 is the application layer of the internet that uses Web3 technology. This distinction is important to understand when considering the potential of Web 3.0.
Ether’s historical price action has changed
During earlier market cycles, Ethereum tended to outshine BTC in times of bullish market developments, yet this correlation started to alter in early 2023. Ether and many other altcoins had difficulty as the idea of altcoins utilization within Web3, DeFi and NFTs came under strain in 2022 and 2023.
Strict regulations on the crypto sector, reduced inflows from both retail and institutional investors, as well as an increase in investors looking for protection in US-dollar-pegged stablecoins all contributed to the negative sentiment towards Ethereum.
Bitcoin dominance rises
In addition to a change in Ether’s performance in its BTC pair, ETH was negatively impacted by the steady rise in Bitcoin dominance. As reported by Cointelegraph, Bitcoin dominance is a measure of BTC’s market capitalization relative to the overall crypto market and it highlights the asset’s strength and is often used by investors as a sentiment gauge.
Amidst the comparison of web 1.0 vs web 2.0 vs web 3.0, web 2.0 vs 3.0 and the difference between web3 and web 3.0, the Bitcoin halving is fast approaching (April 2024) and investors believe that a spot BTC ETF is imminent. This could explain the drop in Ether’s value in its BTC pair as investors may be more bullish about BTC and allocating less money to Ether investments.
The emergence of Defi, NFTs, DAOs and Web 3.0 has also opened up new avenues to make money with Web 3.0. With the future of the web being Web 3.0, it is possible that this could further drive the bullish sentiment towards Bitcoin.
Ethereum price breaks below critical support vs. Bitcoin
The ETH/BTC pair dropped to 0.050 BTC on Oct. 23 and has remained in a downtrend since then. Notably, the pair fell below its 200-week exponential moving average near 0.058 BTC, raising the possibility of further downside in the short-term.
According to Cointegraph contributor Yashu Gola, the multifaceted market dynamics, investor sentiment and stringent regulatory environment are likely to keep impacting Ethereum’s price relative to Bitcoin. These could remain the dominant headwinds for the ETH/BTC pair for the foreseeable future.
The Web 3.0 revolution has been a major factor in the development of Defi, NFTs, DAOs, and other forms of making money on the Web 3.0 platform, while the differences between Web3 and Web 3.0 are becoming more and more apparent. It is still unclear whether Web 3.0 will be the future of the internet, or if Web 1.0 and Web 2.0 will remain the dominant forms of web technology.
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