How low can ETH price drop versus Bitcoin amid the DeFi contagion?
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Interestingly, Ether has not reclaimed its all-time high against Bitcoin since June 2017 despite the NFT craze.
The ETH/BTC pair’s bullish trends typically suggest an increasing risk appetite among crypto traders, where speculation is more focused on Ether’s future valuations versus keeping their capital long-term in BTC.
Conversely, a bearish ETH/BTC cycle is typically accompanied by a plunge in altcoins and ETH’s decline in market share. As a result, traders seek safety in BTC, showcasing their risk-off sentiment within the crypto industry.
Interest in the Ethereum blockchain soared during the pandemic as developers started turning to it to create a wave of so-called decentralized finance (DeFi) projects, including peer-to-peer exchange and lending platforms.
That resulted in a boom in the total value locked (TVL) inside the Ethereum blockchain ecosystem, rising from $465 million in March 2020 to as high as $159 billion in November 2021, up more than 34,000%, according to data from DefiLlama.
Interestingly, ETH/BTC surged 345% to 0.08, a 2021 peak, in the same period, given an increase in demand for transactions on the Ethereum blockchain. However, the pair has since dropped over 35% and was trading for 0.057 BTC on June 26.
ETH/BTC’s drop coincides with a massive plunge in Ethereum TVL, from $159 billion in November 2021 to $48.81 billion in June 2022, led by a contagion fears in the DeFi industry.
Also, institutions have withdrawn $458 million this year from Ethereum-based investment funds as of June 17, suggesting that interest in Ethereum’s DeFi boom has been waning.
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