Ethereum significantly underperformed Bitcoin in 2024. This is widely known. Specifically, ETH is up 18% for the year and BTC is up 70% as of this writing. Bitcoin continues to get all the attention as it nears a breakout attempt and new all-time highs, and rightly so. Aether may seem to have fallen out of favor for quite some time, but it's no different from what we've seen over the years. In fact, this is the third time since 2016 that the relative ETH/BTC line has trended downward. Admittedly, the current decline is the longest of the three, but clearly not the worst. From 2017 to 2019, ETH endured far more pain against BTC than it has since 2021. Overall, there are five relative phases, the other two being when ETH outperformed BTC. The question now is whether ETH is close to regaining the leadership position against BTC once again. There's nothing to suggest that's about to happen, as the relative line is hitting new multi-year lows, but trends tend to reverse suddenly and then all at once. If ETH is to gain momentum with Bitcoin in the near term, it will need to take advantage of a potential bullish chart pattern that has just formed: this inverted head-and-shoulders formation. It has been taking shape over the past few months and ETH is now close to triggering it. As is clear from the chart, ETH needs to pass through the 2,700 zone for that to happen. There is a neckline to this pattern and a downtrend line measured from the May high. Ethereum broke out in this same region in February and August, respectively. Although ETH is still well off its highs, capitalizing on this pattern could spur positive momentum once again. A breakout would target the $3,350 area, about 23% above current levels. And that may be just the beginning… The bigger pattern is this potential cup-and-handle formation on the logarithmic scale weekly chart over a three-year period. It will take a while for this to become a reality (and there is a lot more room for upside), but ETH should eventually break above its March 24 highs around $4,100. But we've seen it before. Of note are the two largest monthly pattern breakouts that occurred in 2017 and 2020. Needless to say, ETH rose significantly both times. Each time is different, but we've been watching Bitcoin and ETH exploit technical patterns for nearly a decade. Just because it took me longer to play this time doesn't mean I can't keep working on it eventually. -Frank Cappelleri Founder: https://cappthesis.com Disclosure: (Owns ETHE ETF.) All opinions expressed by CNBC Pro contributors are solely their own, and CNBC, NBC UNIVERSAL, It does not necessarily reflect the views of its parent company or affiliates. It may also have been previously disseminated on television, radio, the Internet, or another medium. The above is subject to our Terms of Use and Privacy Policy. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The content is general in nature and does not reflect your unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer.
