Ethereum is the second largest cryptocurrency ranked by market cap. The recent consolidation “upgrade” of the Proof of Stake consensus mechanism and other changes have sparked discussion about possible “volatility” — a situation in which Ethereum has dethroned Bitcoin as the best cryptocurrency in the market.
Alternatively, Ethereum’s dominance could be in “serious” danger, if the ominous Japanese candlestick pattern is a precursor to what is to come in the cryptocurrency market.
Lagging performance against cryptocurrency notes ETH.D is at risk
While Ethereum could rally 90% from its bear market low compared to Bitcoin’s 50%, when comparing BTC’s year-to-date returns, BTC’s 50% gain against the USD only beats ETH by 40%. From this metric alone, it is clear that Ethereum has been lagging behind Bitcoin.
As of the last two weeks in the cryptocurrency, the reason for the sluggish behavior has been revealed: The Securities and Exchange Commission (SEC) has begun targeting cryptocurrency businesses, specifically to offer them to clients.
Instead of the merger causing Ethereum to outperform the market, it caused the opposite effect. Concerns about the possibility of ETH being classified as a security also raised concerns.
Whether or not the fears turn out to be valid, continued lagging performance while the rest of the cryptocurrency market launches into an uptrend could make a huge dent in Ethereum dominance.
A doge’s grave could damage Ethereum’s dominance
ETH.D, which represents the dominance of Ether compared to the rest of the market, closed the month of January with an ominous Japanese candlestick pattern called a grave doji.
A gravestone dojo appears | ETH.D at TradingView.com
The candlestick pattern is a potential bearish reversal signal, which is formed when there is an open, low, and close at the same general level, with a long upper wick. The pattern shows bulls pushing prices higher, only to be met with strong rejection by bears to the open and bottom of the candle.
This type of behavior and candlestick signal tends to appear before an extended bearish move. The opposite sign is called a fiery star and involves reversed formation dynamics. A small bottom wick is acceptable, but the pattern often appears with a completely flat bottom.
Bearish momentum is increasing | ETH.D at TradingView.com
Like any Japanese candlestick pattern, the signal is strongest when technical indicators and other chart patterns support what the Doji Tombstone is telling the market. For example, a possible failure to restore the long-term trend line and strengthen the bearish momentum makes the signal credible. The Tombstone Doji also appears in a long-term resistance that Ethereum has yet to break through.
The bullish alternative | ETH.D at TradingView.com
Alternately bullish, even with a further correction in ETH dominance, the chart could form a massive inverse head and shoulders pattern, possibly signaling a future price target that would set new all-time highs against Bitcoin, and renew talk of a “flip” in the cryptocurrency. .
