Ethereum is the second largest cryptocurrency by market cap. Join the new “upgrade” to the proof-of-stake consensus mechanism and other changes raised the discussion of possible “flippening” – a situation where Ethereum unseats Bitcoin as the top cryptocurrency in the market.
However, Ethereum’s dominance could be in danger of a “grave”, if the unpleasant Japanese candlestick pattern is a prelude to what is to come in the crypto market.
Lagging Performance Against Crypto Leaves ETH.D Is At Risk
While Ethereum can rise 90% from the bear market low compared to Bitcoin 50%, when comparing the year-to-date returns BTC 50% gain against USD beats ETH only 40%. From this metric alone, it is clear that Ethereum is lagging behind Bitcoin.
In the last few weeks in crypto, the reason for the laggard behavior was revealed: the SEC started targeting cryptocurrency businesses, specifically for offering staking to customers.
Instead of Merger causing Ethereum to outperform the market, it caused the opposite effect. Fears about ETH being labeled as a security are also causing concern.
Whether the fear will be valid or not remains to be seen, its continued performance at a time when other cryptocurrency markets may be bullish could reduce Ethereum’s dominance.
Doji Gravestone Could Break Ethereum’s Dominance
ETH.D, representing the dominance of Ether compared to the rest of the market, closes every January with an ominous Japanese candlestick pattern called the gravestone doji.
A gravestone dojo appears | ETH.D at TradingView.com
The Japanese candlestick pattern is a potential bearish reversal signal, formed when there is an open, low, and close at the same general level, with a long upper axis. The order shows the bulls pushing prices higher, only to be met with a strong restriction by the bears back down to open and less than the candle.
This type of behavior, and candlestick signals, tend to appear before the move down. The opposite signal is called a shooting star and involves the dynamics of inverse formation. A small, lower wick is acceptable, but the pattern is often seen with a flat base.
Bearish momentum is increasing | ETH.D at TradingView.com
Like the Japanese candlestick pattern, the signal is stronger when technical and other chart patterns support what is called a graveyard doji in the market. For example, a potential failure to recover the long-term trend line and strengthen the bearish momentum increases confidence in the signal. The gravestone doji is also seen at long-term resistance that Ethereum has so far been unable to break through.
The bullish alternative | ETH.D at TradingView.com
As a bullish alternative, even with a further correction in the dominance of ETH, the chart can form a massive inverted head and shoulders pattern, can point to a future price target that will set a new all-time high against Bitcoin, and renew the talk of “flipping” in crypto.