Although we often talk about the outperformance of Ethereum compared to Bitcoin in recent months, and although some investors expect in the long term more or less that the capitalization of ETH exceeds the capitalization of BTC, Bitcoin is expecting an event that expected under the name “flipping”. much better than Ethereum last week according to some data.
In fact, an analysis of Bitcoin and Ethereum transaction flow showed a clear divergence in favor of BTC for long-term holdings.
Note that transaction flows refer to the amount of cryptocurrencies deposited or withdrawn from crypto exchange platforms.
Bitcoin, a better bet than Ethereum in the long term?
The principle is simple: Inflow is generally considered bearish. In fact, when traders deposit cryptocurrencies on exchanges, it is a priori that they plan, or at least, that they plan to sell them. On the contrary, the outflows from the platforms are considered bullish factors for the cryptocurrencies concerned, since this often means that traders are storing long-term on cold crypto wallets.
Because of this, cryptocurrency traders and analysts often look at inflows and outflows, as well as the balance of flows, to determine whether the market is more likely to go up or down.
However, recent data published by blockchain data analysis firm Glassnode shows that the rate of cryptocurrency outflows from exchanges has increased significantly over the past week when it comes to Bitcoin.
Conversely, when it comes to Ethereum, the amount of tokens left by exchanges fell back to near zero last week, which means traders are still ready to sell their ETH.
This is surprising, especially since the “Merge”, which will make the ETH network switch from a PoW system to a much lower energy PoS system, is scheduled for September. This indicates that Ethereum has already exhausted its upside potential from the prospect of the merger. It also involves the risk that investors will sell the news after ‘buying the rumour’.
As for the divergence between Bitcoin and Ethereum, it can be interpreted because investors see Bitcoin as a better long-term bet in the current highly uncertain economic environment.
Bitcoin & Ethereum: Does Technical Analysis Confirm ETH’s Advantage?
However, from the chart analysis point of view, the BTC-ETH divergence seen in the flows is not confirmed.
In fact, both cryptocurrencies show a very clear downward trend since mid-August.
Bitcoin went from a peak of $25,212 on August 15th to a low of $19,526 last weekend, a drop of -22.5%.
For its part, Ethereum fell from $2012 to $1422, a comparable drop of -29%.
In order for Bitcoin to challenge its short-term downturn, it will need to break through the negative trend line seen since the August 15 peak, which is currently located at around $20,500. The context is exactly the same for Ethereum, with a downward line, currently at $1600, and visible from the middle of the month.
In other words, a break of Bitcoin above $20,500 would be a bullish sign, just as a break above $1,600 would be graphically positive for Ethereum.
Finally, in case of further decline, the first supports to watch for Bitcoin are located at $19,500 and $19,000, while the first support for Ethereum is $1400/1425.
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