Key Points
- The ETH/BTC pair is showing signs of potential growth, with key support around 0.05 BTC.
- A declining U.S. Dollar Index (DXY) could potentially drive capital into risk assets such as Bitcoin and Ethereum.
The ETH/BTC pair is currently near its cycle lows, but a key support level around 0.05 BTC could potentially serve as a launchpad.
If Bitcoin dominance decreases, it is possible that capital could flow into Ethereum, leading to a rebound in the pair.
U.S. Dollar Index and Cryptocurrency
The U.S. Dollar Index (DXY) has dropped to new lows, leading to speculation about capital moving into riskier assets, specifically cryptocurrencies. It has been observed that a weakening dollar usually results in liquidity inflows into Bitcoin and Ethereum.
President Trump’s increase in import tax has amplified the selling pressure on the U.S. dollar, pushing it back to pre-election levels. However, a notable shift has occurred: Bitcoin and the DXY have decoupled, reducing the dollar’s reliability as a key crypto market indicator.
Bitcoin and Ethereum Market Movements
Despite this, macroeconomic catalysts are still at play. After President Trump announced a tariff break, Bitcoin reclaimed $86k after trading below this level for seventeen days, and Ethereum surged past $2k.
Bitcoin’s current non-linear price action provides Ethereum with an opportunity to attract capital. The ETH/BTC pair is showing growing momentum as the MACD flips bullish for the first time in nearly a month.
A well-defined support cluster has formed, indicating a potential breakout and trend reversal in Ethereum’s favor. If the breakout structure is confirmed, analysts predict a move toward 0.0019 BTC per Ethereum, with the pair currently hovering around 0.002 BTC.
However, technical indicators alone are not sufficient. In previous demand zones, buyers were unable to sustain accumulation, leading to liquidity depletion and a drop to a five-year low.
If history repeats itself, the likelihood of further liquidity sweeps remains high. In such a scenario, ETH/BTC could extend its downside, further weakening Ethereum’s relative strength against Bitcoin.
Potential ETH/BTC Reversal
For a confirmed ETH/BTC reversal, a Bitcoin retracement remains a critical trigger. The current market structure identifies $89k as a major resistance zone for Bitcoin. If Bitcoin faces sustained rejection at this level, a corrective move could unlock ETH/BTC rotation, offering a potential bid for Ethereum dominance.
However, bullish conviction appears weak. Since the post-election rally, Ethereum has shown an increased correlation to Bitcoin’s downside, consistently forming lower highs.
On the 3rd of March, Bitcoin’s 8.54% single-day drawdown resulted in a 14.66% Ethereum decline. This structural shift suggests Ethereum is becoming increasingly reactive to Bitcoin’s drawdowns rather than benefiting from capital rotation.
If Bitcoin retraces sharply, Ethereum risks losing the $2K liquidity zone, potentially driving ETH/BTC to fresh cycle lows.
