Why Ethereum Price Has Failed to Break $2,000: 3 Key Factors
The price of Ethereum’s native token, Ether (ETH), has seen a 35% increase in 2023. However, it has struggled to surpass the psychological resistance level of $2,000. Let’s explore the three main reasons behind Ethereum’s failure to reclaim this level since May 2022.
Ethereum Price Resembles Bear Cycle Fractal
In 2018-2019, Ethereum faced a bearish rejection near $425, and it is now experiencing a similar pattern in 2023 with the $2,000 level. Both instances show that Ether is in a recovery phase but is encountering resistance at its 0.236 Fib line on the Fibonacci retracement graph. The 0.236 Fib line acted as a selling area in 2018-2019 and is doing the same at $2,000, causing downward pressure on ETH’s price.
Impact of Stronger U.S. Dollar and Bitcoin
The strengthening U.S. dollar has reduced demand for Ethereum, making it difficult for the price to surpass $2,000. There is a negative correlation between major cryptocurrencies and the dollar, which has been affecting Ether throughout 2023. Additionally, Ethereum has underperformed Bitcoin due to the hype surrounding the spot Bitcoin ETF. The ETH/BTC pair is down by 20% this year.
Ethereum-based investment funds have experienced a decrease of $114 million in capital in 2023, while Bitcoin-based funds have gained $168 million during the same period. This has resulted in lower yields for investors and decreased TVL (total value locked) on the Ethereum network.
Ethereum Technical Analysis
Looking at technicals, Ethereum’s price could potentially rebound towards its 50-day exponential moving average (50-day EMA) at around $1,665. However, there is a bearish continuation pattern called an ascending triangle, which suggests a potential breakdown below the lower trendline. If this occurs, the price could drop to $1,465 and $1,560 in October 2023.
A short-term breakout above the 50-day EMA could push ETH’s price towards the upper trendline of the triangle around $1,730 in October 2023.
Ethereum NFT Volumes and Active Wallets Decline
Ethereum’s NFT volumes and unique active wallets have dropped by 30% and 16.5% respectively in the last 30 days. This decline includes popular apps such as Uniswap V2, 1inch Network, and Lido. These metrics reflect a decrease in activity within the Ethereum ecosystem.
Hot Take: Ethereum Faces Hurdles to Break Above $2,000
Ethereum’s journey to surpass $2,000 has been met with resistance due to several factors. The bear cycle fractal, stronger U.S. dollar and Bitcoin performance, technical patterns, and declining NFT volumes and active wallets have all contributed to Ethereum’s struggle. Overcoming these hurdles will be crucial for ETH to regain upward momentum.
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