Ethereum falls more sharply than Bitcoin as China escalates crypto ban, ETH / BTC to 3-week lows

The price of Ethereum’s native token Ether (ETH) fell on Friday after China stepped up its crackdown on the cryptocurrency by declaring its transactions “illegal”.

“Financial institutions and non-bank payment institutions cannot provide services for activities and activities related to virtual currency,” the People’s Bank of China said in a statement on its website on Friday, adding that online cryptocurrency services are provided to Chinese citizens by foreign providers are exchanged. “Illegal financial activity”.

The bid on the ETH / USD pair then fell by up to 13.30% to USD 2,735. At its current weekly high (WTD), traders paid as much as $ 3,346 for an Ether token, but fell to just $ 2,651 after an uproar last week. China’s highly indebted real estate sector is affecting the crypto market.

As a result, Bitcoin, the world’s leading cryptocurrency, also fell from a WTD high of $ 47,358 to a low of $ 2,651. Meanwhile, the price fell 9.38% on Friday – a big drop that day, but less than Ether’s over the same period.

So it seems that traders have chosen to ditch digital assets that offer better returns than Bitcoin over the long term. For example, ETH / USD Year Started (YTD) gains are still above 280% even after the recent decline. In contrast, Bitcoin’s return since the start of the year is just over 40%.

ETH / BTC falls to a low of several weeks

Ether also performs behind Bitcoin, with the ETH / BTC pair falling to 0.066 BTC for the first time in over three weeks. At its high for the year, the pair is trading at 0.079 BTC.

However, the Ethereum charts show that Ether will grow faster than Bitcoin in the coming sessions. This was mainly due to the bull flag formation in the ETH / BTC market, a bullish continuation pattern that occurs when price consolidates down / sideways (FLAG) after a strong uptrend (FLAGPOLE).

The Bull Flag usually sets its profit target at a length equal to the size of the flagpole when the price breaks above the upper trendline of the channel. However, ETH / BTC could take a bullish breakout to hit its previous local high of 0.0824 BTC.

The bullish fundamentals still exist

In the meantime, the Ethereum token is also expected to increase overall due to its growth in the emerging decentralized finance (DeFi) sector. As Cointelegraph previously reported, Total Value Locked (TVL) in the decentralized applications (dapp) industry reached $ 142 billion in August 2021, of which 68% is focused on the Ethereum network.

Related: Ethereum Forms Double Top? ETH price loses 12.5% ​​amid fears of Evergrande contagion

This justifies a higher demand for the ether token, as it can supply Dapp-enabled smart contracts with electricity. On the flip side, active supply is generally expected to decline as owners continue to tie their ETH holdings to Ethereum’s smart contract proof-of-stake.

More supply is expected to be withdrawn from circulation as the Ethereum network continues to burn some of the 13,000 ETH days spent following the London Hard Fork upgrade on August 5th. According to WatchTheBurn, the network burned 358,616 ETH, valued at over $ 1 billion.