Ethereum eyes new yearly lows against Bitcoin as bulls snub successful ‘Merge’ repeat

Ethereum’s native token Ether (ETH) resumed its decline against Bitcoin (BTC) two days after a successful repetition of its proof-of-stake (PoS) algorithm on his oldest testnet “Ropsten”.

ETH/BTC fell 2.5% to 0.0586 on June 10. The pair’s bearish move is part of a correction that began the previous day when it hit a local high of 0.0598, hinting at weaker bullish sentiment despite the optimistic “Merge” update.

Interestingly, the selloff occurred near ETH/BTC’s 50-4H exponential moving average (50-4H EMA; the red wave) around 0.06. This technical resistance has capped the pair’s bullish attempts since May 12, as seen in the chart above.

Staked Ether behind ETH/BTC weakness?

Ethereum’s strong bearish techniques appeared to have mastered its PoS testnet breakthrough. And the continued imbalance between Ether and its so-called Staked Ether (stETH) token could be the reason, according to Delphi Digital.

“Testnet Merge was a success, but the ETH market was unresponsive,” the crypto research firm said. wroteto add:

“Concerns over the ETH-stETH nexus swirl as the health of post-Terra financial institutions comes into question.”

Several DeFi platforms that have staked Ether in the Ethereum PoS smart contract will not be able to access their funds if the merger is delayed. Thus, they may encounter ETH liquidation issues as they attempt to reimburse their stakeholders.

This could prompt these DeFi platforms to sell their existing stETH holdings for ETH. Meanwhile, if they run out of stETH, the selling pressure is likely to shift to their other holdings, including ETH.

If Swissborg tried to exit its entire stETH position, it would lower the peg another penny.

More importantly, it would consume 25% of the remaining ETH liquidity in the pool. Swissborg also contributes a few thousand Eth to this pool… 6/ pic.twitter.com/sWIdzMWNvU

— Dirty Bubble Media: ⏰ (@MikeBurgersburg) June 8, 2022

More downsides for Ether price?

From a technical perspective, Ether’s latest decline against Bitcoin pushed ETH/BTC below multi-month support around 0.0589, exposing the pair to further correction in June, followed by from Q3/2022.

The now broken support level coincides with the 0.382 Fib line of the Fibonacci retracement chart as shown in the chart below. Whether ETH/BTC correction extendsthe next downside target for the pair is around the 0.5 Fib line on the same chart – around 0.0509, a new 2022 low.

Interestingly, the 0.0509 level is close to ETH/BTC’s 200-week exponential moving average (200-week EMA; the blue wave) and its multi-year ascending trendline support. Together, this support confluence could be where ETH/BTC exhausts its bearish cycle, allowing the pair to target 0.0589 as an intermediate bounce target.

Related: 3 reasons Bitcoin is regaining its dominance in the crypto market

Conversely, a further break below confluence could prompt Ether to look at 0.043 BTC (near the 0.618 Fib line) as its next downside target, down nearly 25% from the June 10 price.

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