Analyst Issues Ethereum "Bearish Diving Knife" Warning, ETH/BTC Exchange Rate Could Continue to Decline

March 13th. As per Cointelegraph, currently the ETH/BTC exchange rate has witnessed a decline of more than 1.5%, reaching 0.0224 and hitting the lowest level since May 2020. Analysts anticipate that there might be further decreases in the forthcoming weeks. This drop is a part of a long-term downtrend ever since June 2017 when it reached a historical high of 0.156. The cumulative decline has exceeded 85%, emphasizing Ethereum's continuous weakness against Bitcoin. In the two-week cycle of the ETH/BTC chart, the momentum indicator that measures overbought and oversold states - the Relative Strength Index (RSI) - has dropped to a historical low of 23.32. Ordinarily, an RSI below 30 indicates an oversold condition which may prompt a price rebound. Nevertheless, Ethereum's RSI has continued to decline after being oversold for two months, suggesting that its downtrend has not stabilized but is rather accelerating. Cryptocurrency analyst Alessandro Ottaviani refers to this phenomenon as a "falling knife" scenario where the asset price plunges rapidly, making bottom buyers hesitant. Trying to catch falling prices might lead to additional losses. To confirm a trend reversal, attention should be paid to reclaiming key resistance levels. Traders need to keep an eye on RSI stabilization and the breakthrough of key resistance levels. Ideally, ETH/BTC needs to initiate a recovery from the 0.022 BTC level, which triggered a 300% rebound in December 2020. If a rebound occurs, the trading pair may ascend to around 0.038 BTC, close to the 0.382 Fibonacci retracement level and in line with the 50-week Exponential Moving Average (50-week EMA). However, the technical analysis indicates that ETH/BTC may continue on a "falling knife" trajectory, with the next potential support level in the historical range of 0.020 - 0.016, indicating a further downside potential of approximately 30% from the current exchange rate. The weakness in the ETH/BTC exchange rate is not solely due to technical factors. Currently, Ethereum is encountering significant challenges from competitive Layer 1 public blockchains like Solana and Sui, resulting in a shift in market focus. Additionally, Bitcoin's status as "digital gold" with its safe-haven attributes continues to attract capital inflows during times of macroeconomic uncertainty. Ethereum has not fully achieved the anticipated ecosystem boom after its transition to Proof of Stake (PoS), leading to intensified pressure on the ETH/BTC pair due to fund rotation effects.