Key Points
- Ethereum may drop to $1200 by December 2024 before rallying, according to crypto analyst Benjamin Cowen.
- The prediction is based on a similar pattern observed in 2019 and the ETH/BTC ratio.
Crypto analyst Benjamin Cowen suggests that Ethereum, the second-largest cryptocurrency by market cap, may experience a significant drop before rallying.
This prediction comes after Ethereum recorded a 2% increase early this week, trading at $2.3k, which was a recovery from the previous week’s 5% losses that brought it down to $2.1k.
Pattern Prediction
Cowen’s prediction is based on a pattern observed in 2019, where Ethereum fell back into its wedge right before the first rate cut, similar to what is expected in 2024.
After the first rate cut in 2019, Ethereum fell below its wedge, and then the ETH/BTC ratio bottomed out.
The ETH/BTC ratio tracks Ethereum’s value relative to Bitcoin, which recently hit a yearly low of 0.40.
Cowen suggests that if the 2019 pattern repeats, the ETH/BTC ratio could bottom out when Ethereum hits $1200 by December 2024, before picking up momentum in the first half of 2025.
The ETHBTC ratio has struggled to hold at the range-low of its two-year-long channel.
Market Sentiments
Quinn Thompson of crypto hedge fund Lekker Capital recently expressed a similar view. He argued that the ETH/BTC ratio could drop to 0.033 by the end of the year before reversing, claiming that Ethereum was overvalued at current prices.
Based on Bitcoin’s current $56K value, that would translate to $1800 for Ethereum.
One reason for Ethereum’s underperformance relative to Bitcoin has been the disappointing results from US spot ETFs.
Since these products started trading in July, they have recorded cumulative outflows of $574 million.
In contrast, US spot Bitcoin ETFs netted $16.9 billion in total inflows since their debut.
Despite a relief rally this week, bearish sentiment remains dominant among Ethereum speculators.
The Taker Buyer Sell Ratio metric shows that sell volumes have outpaced buy volumes, indicating prevailing bearish sentiment in the derivatives market.
In the short term, the key supply levels to watch out for were the 50-day EMA (Exponential Moving Average) of $2.3K, $2.4K, and $2.5K.
