Ethereum noticeably has underperformed bitcoin in 2024. This is widely known. Specifically, at the time of this writing, ETH is up 18% for the year and BTC is up 70%. With bitcoin approaching a major breakout attempt and new all-time highs, it continues to attract all of the attention and rightly so. While it may seem like ether has been out of favor for a considerable length of time, it’s not anything different than we’ve seen before over the years. In fact, this is the third time that the relative ETH/BTC line has been in a downtrend since 2016. Indeed, the current decline is the longest among the three, but it’s clearly not the worst. From 2017-2019, ETH endured a lot more pain vs. BTC than it has since 2021. Overall, there have been five relative phases – with the other two being the times when ETH outperformed BTC. The question now is whether ETH is close to retaking the leadership position vs. BTC once again. With the relative line making multi-year lows, there’s nothing to suggest that’s about to happen, but trends have the tendency to flip suddenly and then all at once. If ETH is going to gain any traction on Bitcoin soon, it will need to take advantage of the potential bullish chart pattern it has just formed – this inverse head & shoulders formation. It has taken shape over the last few months, and ETH is getting closer to triggering it now. As is clear on the chart, ETH must get through the 2,700-zone for that to happen. The pattern’s neckline is there, as well as the downtrend line that is measured from the May high. Ethereum both broke out and broke down from this same area in February and August, respectively. Even though ETH remains well off its highs, leveraging this pattern could help spur positive momentum once again. A breakout would target the $3,350-area, which is about 23% above current levels. And that could be just the start… The much bigger pattern is this potential cup and handle formation on the weekly chart in log scale, which spans three years. It will take some time (and a lot more upside) for this to become a reality, with ETH needing to ultimately overtake the March’24 highs near $4,100. But we’ve seen it before. Noted are the two biggest monthly pattern breakouts, which took place in 2017 and 2020. Needless to say, ETH extended much higher both times. Every time is different, but we’ve now seen bitcoin and ETH leverage technical patterns for nearly a decade now. Just because they’ve taken longer to play out this time doesn’t mean they can’t ultimately continue to work. -Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: (Owns ETHE ETF.) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
