Ethereum vs. Bitcoin: ETH price risks 20% drop if key support level breaks

Ether's (ETH) rally versus Bitcoin (BTC) is not lone showing signs of exhaustion, but is besides successful information of breaking beneath a cardinal method enactment level. 

ETH slides vs. BTC successful 2nd fractional of January

The ETH/BTC brace declined astir 9.25% connected Jan. 24 from its section apical of 0.0779 BTC established connected Jan. 11. Since the commencement of the year, Bitcoin is somewhat outpacing Ether successful USD terms, rising 38% versus 35%, respectively.

ETH/BTC regular candle terms chart. Source: TradingView

Interestingly, Ether's pullback versus Bitcoin has landed its terms astatine the bottommost of its EMA ribbon range, arsenic shown below.

ETH/BTC play candle terms chart. Source: TradingView

The EMA ribbon indicator shows galore exponential moving averages of expanding timeframe connected the aforesaid terms chart. Dropping beneath the ribbon scope increases an asset's likelihood of seeing an extended down-move.

So successful different words, breaking little would summation its anticipation of declining by much than 20% from its existent terms levels.

Conversely, rising supra the ribbon scope raises the asset's chances of a broader rally.

Ethereum terms capped by cardinal descending trendline

This week, ETH/BTC dropped to the 55-week exponential moving mean (the reddish wave) — a bottommost question — of its EMA Ribbon indicator, arsenic shown below. Buyers took power adjacent the 55-week EMA, prompting Ether to retrieve a specified 0.35% versus Bitcoin to 0.0708 BTC connected Jan. 24.

Related: This $25K BTC terms people would spell misery for Bitcoin shorters

But now, the likelihood of retesting the EMA ribbon bottommost is precocious owed to a multi-month descending trendline absorption (black trendline successful the illustration below), wherever sellers person been much progressive arsenic of late.

ETH/BTC play terms illustration focusing connected descending trendline resistance. Source: TradingView

Therefore, 1 cannot regularisation retired of the anticipation of ETH/BTC breaking beneath the EMA Ribbon range, akin to however the brace did successful May 2022 successful the aftermath of the Terra collapse.

Back then, Ether fell by implicit 25% versus Bitcoin to 0.0490, a level coinciding with its 200-week EMA (the bluish wave). 

Therefore, if a akin breakdown occurs successful the coming weeks, the ETH/BTC brace whitethorn trial the 200-week EMA adjacent 0.0550 BTC arsenic its superior downside target, oregon astir a 20% terms driblet from existent levels. 

This nonfiction does not incorporate concern proposal oregon recommendations. Every concern and trading determination involves risk, and readers should behaviour their ain probe erstwhile making a decision.