After peaking at $4,091 following the Dencun upgrade, Ethereum (ETH) has not performed as well as Bitcoin and other cryptocurrencies over the past month, leading to doubts about the altcoin's downtrend. Looking at Bitcoin's 18% price drop and the 16% decrease in total cryptocurrency market capitalization during a similar period provides a broader context for Ethereum's situation.

Several market and technical indicators suggest that ETH may experience a further correction before starting a sustained recovery. For instance, the ETH/BTC ratio has been trending lower since March, reaching levels not seen since January. This decline demonstrates Ethereum's underperformance compared to Bitcoin and other top layer 1 tokens like BNB and SOL, which have seen substantial price increases recently.

Several factors have contributed to Ethereum's underperformance, including specific Bitcoin-related developments in 2024, such as the success of U.S. spot Bitcoin ETFs since their approval by the Securities and Exchange Commission and the upcoming Bitcoin supply halving that historically precedes price uptrends in the crypto market. Additionally, Ethereum's network activity has dropped recently, with daily active addresses decreasing from 622,963 to 546,484 in just one week.

Despite remaining a prominent player in the layer 1 sector, Ethereum faces strong resistance around the $3,600 level, indicating a challenging path to recovery. The presence of a bear flag on the daily chart further suggests a continuation of the downtrend, with support at $3,497 potentially leading to a 26% price decline to $3,060. The relative strength index (RSI) around 50 also indicates selling pressure during the latest price rally.

Please note that this article does not provide investment advice, and readers should perform their own research before making any financial decisions.