Ethereum 'falling knife' warning: Is another 30% crash versus Bitcoin coming?

Ethereum’s native token, Ether (ETH), has dropped to its multi-year lows against Bitcoin (BTC), prompting analysts to predict further declines in the coming weeks.

On March 13, ETH/BTC—a pair that tracks Ether’s strength against Bitcoin—dropped by over 1.50% to reach $0.022, its lowest level since May 2020.

ETH’s descent is part of its multi-year downtrend that started when it established a record high of $0.156 in June 2017. Since then, it has plunged by more than 85%, underscoring Ether’s growing weakness against Bitcoin.

Meanwhile, on the two-week ETH/BTC chart, the relative strength index (RSI), a momentum indicator used to measure whether an asset is overbought or oversold, has fallen to a record low of 23.32.

ETH/BTC two-week price chart. Source: TradingView

Typically, when RSI drops below 30, it signals oversold conditions, potentially leading to a price rebound.

However, in Ethereum’s case, RSI has continued to plunge even lower even two months after becoming oversold, suggesting that ETH’s downtrend is still accelerating rather than stabilizing.

Crypto analyst Alessandro Ottaviani has described the situation as a “falling knife” scenario—a term used to describe an asset that is experiencing a rapid and steep decline, often discouraging buyers from stepping in too soon.

A falling knife implies that attempting to catch the asset at a perceived low could lead to further losses if the downtrend persists.

For Ethereum to signal a potential reversal, traders will be watching for RSI stabilization and reclaim of key resistance levels. That ideally begins with a rebound from the 0.022 BTC level, which had limited ETH/BTC’s downside attempts in December 2020, leading to a 300% rally.

ETH/BTC weekly price chart. Source: TradingView

Should a rebound happen, the ETH/BTC pair can rally toward its 0.382 Fibonacci retracement line at around 0.038 BTC, aligning with the 50-week exponential moving average (50-week EMA; the red wave).

Until then, the technical outlook suggests that ETH/BTC could remain trapped in its falling knife trajectory, with the next potential downside targets at historical support levels inside the 0.020-0.016 BTC range.

ETH/BTC two-week price chart. Source: TradingView

The lowest point of this range is approximately 30% below the current price levels.

Ether’s prospects of declining further against Bitcoin are rooted in factors beyond technical analysis.

For instance, Ethereum currently faces strong competition from rival layer-1 blockchains, namely Solana (SOL).

Related: 'The worst thing that happened to Ethereum' — Bitcoin up 160% since the Merge

VanEck noted that Solana’s decentralized exchange volume has surpassed Ethereum’s even during a steep dropoff in memecoin trading activity. Meanwhile, Solana’s volume has risen consistently in recent months, which coincides with a decline in Ethereum’s volumes.

Solana vs. Ethereum DEX volumes. Source: VanEck

Furthermore, the launch of spot Bitcoin ETFs has fundamentally altered the traditional crypto market cycle that used to benefit Ethereum and other altcoins.

Historically, after Bitcoin surged post-halving, capital rotated into altcoins, triggering an “altseason” where ETH and other assets outperformed BTC. However, the $129 billion inflows into Bitcoin ETFs in 2024 have disrupted this cycle, draining liquidity from the broader altcoin market—including Ethereum.

Bitcoin Dominance Index weekly price chart. Source: TradingView

Another factor is Ethereum-specific selling pressure.

The recent Bybit hack reportedly led to substantial ETH liquidations, with some of that value laundered via decentralized platforms like Thorchain. This absorbed sell-off may still be rippling through the market, depressing ETH’s relative value.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.