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Divergent On-chain Trends Within Ethereum/Bitcoin Network Add to Reasons Why the ETH/BTC Price Might Continue Dropping

In recent weeks, the exchange rate between Bitcoin (BTC), the world’s first and largest cryptocurrency by market capitalization, and Ether (ETH), the second-largest cryptocurrency that powers the Ethereum blockchain, has fallen fast.

TradingView showed ETH/BTC at 0.0625 on Binance, down 15% from monthly highs in the 0.0735 range and at its lowest level since July 2022. Ether doesn’t cause ETH/decline. BTC’s Ether is up about 10% this month and over 27% from monthly lows around $1,400.

Ether, like most cryptocurrencies, has lagged behind Bitcoin. Bitcoin has led cryptocurrency markets higher amid a “safe haven” bid as global financial system collapses. Over the weekend, Swiss rival UBS bought Credit Suisse after three large regional US banks failed earlier this month. Last week, US banks bailed out First Republic with $30 billion.

Investors worry that additional American and foreign banks may fail despite authorities’ efforts to calm the situation. This is hurting US stock market sentiment but supporting gold and cryptocurrencies like Bitcoin.

When problems arise in the fiat-based, central bank-centered fractional reserve banking system, many investors return to gold, which they see as the ultimate safe haven. Bitcoin, called “digital gold,” is becoming a safe haven. It is a robust, decentralized payment system that runs independently of the financial system.

Ether is strong, decentralized, and independent of the financial system. Its smart programmability allows an independent decentralized finance ecosystem to be constructed directly on its blockchain, surpassing Bitcoin (and already is being built).

Ether is half as old as Bitcoin. Many investors trust Bitcoin since its future doesn’t depend on coders (like the Ethereum Foundation who are still working to upgrade the Ethereum blockchain). Bitcoin will likely remain like gold.

Markets are betting on the Fed’s rate reducing cycle, expecting it to begin soon amid banking sector turmoil. Relaxing banking conditions could boost cryptocurrencies, especially Ether, but Bitcoin is likely to keep its safe-haven advantage. As investors flock to Bitcoin as a safe haven, fundamental on-chain activity measurements are rising, indicating network utilization demand. The Ethereum blockchain shows no such increase in activity on numerous indicators.

This may make it harder for ETH to stay up with Bitcoin, which could lower the ETH/BTC exchange rate. Daily transactions are the first metric. The Block’s graphs show that the Bitcoin network’s measure just reached its greatest level since early 2021, while the Ethereum network’s remains muted.

Whilst the surge of Bitcoin network active addresses has slowed, it is still at multi-month highs. The Ethereum network’s active addresses are not. New addresses joining the Bitcoin network has also increased. New Ethereum addresses remain at multi-year lows.


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