Ethereum drops more than Bitcoin as China escalates crypto ban, ETH/BTC at 3-week low. As China’s action scares investors away, the second-largest cryptocurrency loses 13.30% vs Bitcoin’s 9.38% drop.
The price of Ether (ETH), Ethereum‘s native token, fell somewhat on Friday as China tightened its grip on cryptocurrencies by declaring such transactions ” illegitimate”.
“Financial institutions and non-bank payment institutions are unable to offer services connected to virtual currencies”, the People’s Bank of China declared in a notice on its website on Friday, elaborating that offshore exchanges’ online crypto services to Chinese people are also ” illegitimate financial activities”.
In reaction, bids for the ETH/USD pair fell up to 13.30% to $2,735 per coin. Traders spent as much as $3,346 for a single Ether token at its week-to-date (WTD) high, but the price plummeted to as low as $2,651 after a turmoil in China’s heavily leveraged property industry impacted crypto markets.
As a result, Bitcoin (BTC), the world’s most popular cryptocurrency, has dropped from a WTD high of $47,358 to a low of $2,651. Meanwhile, its price dropped 9.38% on Friday, a huge intraday loss but less than Ether’s plunge during the same time period.
As a result, traders appear to have opted to liquidate digital assets that had higher long-term gains than Bitcoin. ETH/USD, for example, has a year-to-date (YTD) gain of over 280% despite the recent dips. Bitcoin, on the other hand, has made a profit of a little over 40% year to far.
ETH/BTC falls to multi-week lows
Ether underperformed Bitcoin outright, with the ETH/BTC pair sliding to 0.066 BTC for the first time in over three weeks. The pair reached an annual high of 0.079 BTC.
Nonetheless, Ethereum trends indicate that in the next sessions, Ether might gain ground on Bitcoin. This is due to a Bull Flag formation in the Ethereum/Bitcoin market, which is a bullish continuation pattern that appears when prices consolidate lower/sideways (FLAG) after a strong rally (FLAGPOLE).
If the price breaks above its channel’s top trendline, a Bull Flag generally sets profit objectives of length equal to the Flagpole’s size. ETH/BTC, on the other hand, may see a bullish breakthrough to target its recent local high of 0.0824 BTC.
Bullish fundamentals persist
Meanwhile, the Ethereum token is expected to rise in value as the growing decentralised finance (DeFi) industry grows. As previously stated, the total value locked (TVL) throughout the decentralised apps (DApp) sector surpassed $142 billion in August 2021. With the Ethereum network accounting for 68% of the total.
As a result of Ether’s capacity to power smart contracts that support DApps, there will be increased demand for cryptocurrency. However, as investors continue to lock their ETH holdings inside Ethereum’s proof-of-stake smart contract, its active supply is expected to decrease across the board.
As the Ethereum network burns a portion of its daily 13,000 ETH output following the Aug. 5 London hard fork update, more supply is likely to go out of circulation. The network has burnt 358,616 ETH worth more than $1 billion, according to WatchTheBurn.