According to various on-chain data, Ethereum miners are selling across cryptocurrency exchanges. The trend has been evident in the price of the ETH, which has noticeably stagnated against Bitcoin.
On October 20, Forbes Crypto reported that the cryptocurrency market is portraying unusual market dynamics. Ethereum has been declining or staying stagnant while Bitcoin has continuously rallied.
Why ETH Has Been Struggling Against BTC
The struggle of ETH against BTC is particularly noticeable on the ETH/BTC chart. Since September 1, which marked the peak of major decentralized finance (DeFi) tokens, like Yearn.finance (YFI), Aave, and Maker, ETH underperformed against Bitcoin.
Ethereum might have dropped against Bitcoin solely because the momentum of the dominant cryptocurrency has been unexpectedly strong.
Atop numerous macro factors, such as rising inflation and the election risk, the institutional demand for Bitcoin has exponentially increased. Consequently, the appetite for cryptocurrencies mainly shifted to BTC, causing alternative cryptocurrencies to drop off.
But, another factor behind the weakness in the price of Ethereum might have been the sell-off from miners.
According to the data from Santiment, an on-chain market analysis firm, Ethereum miners have been “dumping.” The term dumping is used within the cryptocurrency market to describe when miners or investors sell large amounts of their holdings.
“The Ethereum miners have been dumping, and it appears that last week’s increased on-chain activity and trader FOMO has slowed,” the researchers at Santiment said.
Along with miners, dormant coins have also moved as the price of Ethereum declined in the past several days. Dormant coins refer to ETH holdings that have not moved for a long time. Typically, that suggests long-time ETH investors either sold their holdings or moved them to new addresses.
Three Potentially Positive Factors For Ethereum In The Medium Term
The potential miner-induced sell-off and the stagnancy of Ethereum could positively affect ETH in the medium term for three reasons.
First, despite increasing by over four-fold since March, ETH is no longer overcrowded. There is no fear of missing out (FOMO) and extreme excitement from investors in the market. That indicates that the Ethereum uptrend is likely not overextended.
Second, after the initial cycle of miners selling their ETH ends, then the selling pressure on the cryptocurrency could significantly drop.
Third, while the technical factors suggest ETH has room for an uptrend, the DeFi market’s total value locked is continuously increasing. This metric shows that the user activity on the Ethereum blockchain network is increasing.
In the near term, however, technical analysts do not expect ETH to perform strongly against BTC until it bottoms out against Bitcoin. Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, explained that ETH historically rallied in December, often after BTC saw an initial upsurge.
“Don’t avoid historical data. Previous 5 years, December was the best period to buy ETH. That would line up with a beautiful retest of the 0.026 sats area. And when ETH does well, the rest will follow. In trading, patience is required,” he said.