Ethereum’s Ratio Rises Above 0.07 BTC

Ethereum has been gaining against bitcoin since April 12th when it upgraded to unlock staking rewards.

It has risen above 0.07 BTC for the first time since last month when bitcoin gained preeminence amid banking collapses starting March 12th.

At that point, eth’s ratio dived to eventually 0.062 bitcoin, but in just one week all those losses have been regained as eth’s value against btc goes back to March 12 levels.

This badly drown W may well suggest a double bottom, usually a bullish sign because of the strong comeback.

You can also look at it as a badly drawn cup and handle on the daily frame, though without the handle for now, which would be a very bullish formation if it plays out.

More fundamentally, ethereum has been waiting for more than six months, since the September upgrade to full Proof of Stake, for something like last week.

That’s because the unlock was kind of hanging over the asset and any proper bullish narrative for it as there wasn’t any data to ascertain just how staking rewards play into price.

It’s still too soon in that regard, but as you would have expected, any pressure from rewards seems minuscule compared to the pressure from miners selling.

That’s especially because stakers don’t have any business costs, so the rewards they’re getting might just stay in eth, or otherwise, just like for all holders and investors.

With this out, though gradually as the unlock has still just began, we may finally start seeing the effects of ethereum becoming deflationary.

There’s some debate on whether that has been reflected on price, with the chief argument being that the ratio performed far worse in the 2018 bear and it would have done so this time too were it not for the slashing, as you might call it, where rewards were slashed by 90% to just 10% of what it was prior to September.

Ethereum’s value against bitcoin however has stayed at these levels since May 2021, long before the September 2022 upgrade.

In addition, bitcoin also suffered significantly in 2014, which would be eth’s 2018, and less in 2018, eth’s 2022.

There are specific reasons for both. For bitcoin in 2014, MT Gox had just gone under and the crypto was dead again for a second time, though this time students had grabbed hold of it to not let go.

For eth in 2018, there was the whole Proof of Stake redesign and the uncertain roadmap and all seemed like it would take long, or in short there was a bit of a loss of confidence in both during those times.

So it is not said the bad ratio performance would have repeated, and even if we so conservatively grant that, there should still be some repricing to the upside as if it has been repriced, then during more bullishness it should be significantly higher than in May 2021.

Unless one wants to argue it was priced back in May 2021 when it wasn’t certain that rewards would be slashed by 90%.

More likely, it takes some time for the market to re-adjust, and as there was the unlock ahead, that time perhaps has not quite started.

It probably needs time to clear the unlock too and see how that actually works in price setting, and only then can we finally have the raw forces of supply and demand do their actual pricing and re-pricing based on the new tokenomics.

At which point we may see just how much eth has changed, and just what sort of asset it has become in pretty much its final form where monetary supply and management is concerned.

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• Source: https://www.trustnodes.com/2023/04/17/ethereums-ratio-rises-above-0-07-btc