Is Ethereum Dying? Bitcoin Eyes $100K Rally While ETH Struggles

Ethereum (ETH) is grappling with significant challenges as it loses its three-year support against Bitcoin (BTC), the leading cryptocurrency that appears poised for a historic rally toward $100,000. On Friday, November 22, Ethereum faced resistance at $3,500 for the fourth consecutive month, while competing cryptocurrencies reached record highs.

Ethereum Loses Institutional Interest as ETFs Underperform

Ethereum slipped to 0.03187 BTC, breaching a crucial support level held since 2021. This decline reflects broader market dynamics, including waning interest from institutional and retail investors. Additionally, capital has been shifting toward Layer 2 and Layer 3 scaling solutions, leaving Ethereum struggling to retain its dominance.

The performance of Ethereum Spot ETFs has been lackluster. According to Farside Investors UK, ETH ETFs have recorded consistent outflows over the past week, while Bitcoin Spot ETFs have continued to attract billions of dollars in institutional investments.

Tuur Demeester, Editor-in-Chief of Adamant Research, described Ethereum’s current trajectory as “a slow decline,” citing diminishing institutional adoption and market interest.

Solana Challenges Ethereum’s Dominance

Adding to Ethereum’s woes is Solana (SOL), a competitor that has climbed to the fourth-largest cryptocurrency by market capitalization. Solana has outperformed Ethereum in decentralized exchange (DEX) transaction volumes and protocol fees. October and November 2024 data indicate Solana’s growing dominance across key metrics.

Although Ethereum saw price gains on November 22, its struggle to surpass the $3,500 resistance level raises doubts about its potential to achieve further upside.

Technical Analysis: Ethereum's Mixed Signals

Ethereum’s price shows conflicting signals. On one hand, derivatives market data reveals positive momentum. Open interest in Ethereum futures has risen to $10.35 billion, and Binance funding rates have remained positive since September 2024. Combined with modest price gains, these factors suggest the possibility of a rally.

On the other hand, Ethereum’s RSI stands at 31, bordering on “oversold” territory. If ETH fails to hold its current support, it risks further declines, potentially revisiting the $3,000 level or dropping as low as $2,111, according to technical analysis.

Bitcoin's Rise as "Digital Gold"

While Ethereum struggles, Bitcoin continues to solidify its position as “digital gold.” Institutions and even nations have increasingly adopted Bitcoin as a hedge against geopolitical crises, enhancing its appeal. Ethereum, meanwhile, is still working to fulfill its promise of becoming a global “decentralized computer.”

Layer 2 and Layer 3 protocols have further eroded Ethereum’s base-chain relevance, as their tokens have offered traders better returns in 2024. This shift underscores Ethereum’s scalability challenges and its declining appeal compared to Bitcoin.

Future Prospects for Ethereum

Despite its struggles, Ethereum still holds promise. If ETH can overcome the $3,500 resistance level, it could target the May 2024 peak of $3,977. A 20% rally from current levels would signal a return to strength, particularly if supported by favorable macroeconomic trends or a broader crypto market rally.

Ethereum's correlation with Bitcoin remains high at 0.91, indicating that a significant Bitcoin rally could boost Ethereum’s price. However, traders should exercise caution and monitor key metrics, such as trading volume, open interest, and resistance levels, before increasing exposure to ETH.

Conclusion

Ethereum faces a pivotal moment as it battles waning institutional interest, competition from Solana, and the challenge of breaking critical resistance levels. While its long-term potential remains, Ethereum must address these hurdles to reclaim its position as a leading force in the cryptocurrency market.

The next few weeks will likely determine whether Ethereum can regain momentum or continue to lose ground in the face of growing competition and market shifts.