After rising to be the top performing asset in the market last month, ETH is again testing a price below $ 4,000. When Bitcoin fell below $ 46,000 on December 20, ETH also fell nearly 5%, eventually trading at just $ 3,773. As of press time, the largest altcoin has rebounded to $ 4,003.

ETH 4-Hour Price Chart | Source: Tradingview

In the last few days the story that ETH has overtaken BTC has been hotly debated again. When the ETH price crossed the $ 4,000 mark on December 19, the market predicted a faster recovery. On the flip side, there has been speculation that the next rally could be longer if ETH falls below $ 4,000.

If the current price has just broken this level, can it hold or will it fall again?

Has the recovery momentum been slowed?

Even if ETH falls near the $ 3,800 range, the percentage price at BTC is still trending upwards, just 1% off its most recent high of 9%.

While there are a number of reasons that weaken the price movement of both, the relatively flat percentage means that ETH still outperforms the crypto king in terms of price.

Source: Skew

Additionally, given the high correlation with BTC, a drop in ETH price is almost inevitable. In fact, the correlation of ETH with BTC rose to 0.75 at press time, according to data from IntoTheBlock, from less than 0.65 in December.

In addition, the supply of ETH on the stock exchanges increased in the last week. This is a sign that selling pressures are escalating.

The source: Sanbase

Supporting factors

ETH’s current rally above $ 4,000 doesn’t seem too surprising as retail FOMO is back.

The value transferred in ETH and stablecoins to Ethereum is still skyrocketing. Although this quarter is not over yet, the total value processed on Ethereum has tripled compared to the fourth quarter of 2020 and quintupled compared to the fourth quarter of 2017.

The source: IntoTheBlock

In addition, the total amount of ETH used to pay fees has increased more than ten-fold, from $ 430 million in the fourth quarter of 2020 to $ 4.8 billion so far in the fourth quarter of 2021. This shows a high demand and willingness to pay for the use of the Ethereum blockchain.

In addition, the number of contracts to buy options for the end of January rose to 7,000 ETH. This means that expectations for the top altcoin remain high despite the recent price declines.

Finally, since HODLers and whales buy the ETH dip, ETH can recover from these lower levels faster as BTC rises.

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