Assessing the effect of Bitcoin’s pre- halving on Ethereum

• ETH may form lower highs for the rest of the year, an analyst explained.
• The short-term sentiment around the altcoin has moved from hope into capitulation.

Analyst Benjamin Cowen told his 778,000 YouTube subscribers that Ethereum [ETH] may be negatively affected by Bitcoin’s [BTC] pre-halving second leg. According to Cowen, the said season has hardly been favorable for ETH previously and he explained how this cycle may not be any different.

Realistic or not, here’s ETH’s market cap in BTC terms

In the 29-minute-long session, Cowen highlighted that prior to the 2020 halving, ETH found itself in deplorable condition. He also mentioned that the altcoin only recovered much later after the four-year event had been completed at that time.

Lowering highs into capitulation

Although he admitted that there was some upside for ETH at intervals, most were short-lived. As a result, ETH’s likely movement would be to form lower highs for the rest of the year, and possibly the first quarter of 2024.

For context, a lower high occurs If the price of an asset closes at a high price, but that high is lower than the high at the close of the previous trading day. Cowen said that,

“That does not mean that Ethereum cannot at all move back up. It probably will at various phases. But the general direction should be down.”

At the time of writing, ETH’s price was $1,614, denoting a 12.61% decrease in the last 30 days. Regardless of the price action, several indicators suggest that the altcoin could be undervalued.

However, Cowen’s projection meant that ETH may remain undervalued till year-end. But what is the short-term holder view of Ethereum?

One metric that answers this question is the Short-Term Holder-Net Unrealized Profit/Loss (STH-NUPL). As an indicator to assess the behavior of short-term investors, the STH-NUPL considers the UTXOs younger than 155 days.

A UTXO refers to Unspent Transaction Output, and it reflects where each transaction starts and finishes. At press time, the STH-NUPL had slid from hope (orange) to capitulation (red). This transition implies that market players also share the view that ETH’s price would decrease further. 

Read Ethereum’s [ETH] Price Prediction 2023-2024

Find an entry when ETH falls

Meanwhile, pseudonymous trader Daan Crypto opined that ETH’s performance against BTC has been impressive this cycle. According to his post on X (formerly Twitter), Ethereum has been much more stable when compared to other altcoins despite its low volatility.

But like the general sentiment, Daan expects Ethereum to keep losing its dominance to Bitcoin.  As of this writing, ETH’s value against BTC was 0.063. To buttress his point, Daan mentioned that the coin could drop 0.055. However, he also considered the said value as a good entry price.