Ether (ETH) Struggles to Break $1,900 Resistance
The price of Ether (ETH) has experienced a 6.2% surge from November 3 to November 5. However, the altcoin is facing difficulty in breaking the $1,900 resistance. Despite its current bullish trend, Ether’s 17% return over the last 30 days falls short of Bitcoin’s impressive 27% gain during the same period.
Regulatory Hurdles and Ecosystem Centralization Critiques
Analysts believe that uncertainty surrounding Consensys, a key player in the Ethereum ecosystem, is contributing to Ether’s underperformance. Former employees have filed a lawsuit against Consensys and its co-founder, Joseph Lubin. Shareholders claim that Lubin violated a “no-dilution promise” made in 2015.
Consensys plays a crucial role in developing and hosting infrastructure projects for the Ethereum network. The recent ruling by the High Court of Zug in Switzerland in favor of the plaintiffs has added to the uncertainty.
Regulatory challenges have also hindered Ethereum’s growth. Concerns have been raised about PayPal’s U.S. dollar-pegged stablecoin, PYUSD, which operates on the Ethereum network. PayPal disclosed a subpoena it received from the U.S. Securities and Exchange Commission (SEC) on November 2.
In addition, there has been criticism regarding the decentralization of financial applications (DeFi) within the Ethereum network. Chainlink, a popular solution for oracle services, reduced the number of participants in its multi-signature wallet, raising concerns about governance by regular users.
Evidence of Other Issues: Ether’s Underperformance to Altcoins
Solana (SOL), XRP, and Cardano (ADA) have outperformed Ether in the last 30 days. This suggests that the factors affecting ETH’s performance are not solely related to regulatory pressure or reduced demand for DeFi and NFT markets.
One significant issue for the Ethereum network is high gas fees associated with transactions, including those executed by smart contracts. The current average transaction fee is $4.90, negatively impacting the usage of decentralized applications (DApps).
Total deposits on the Ethereum network, measured in Ether, have reached their lowest levels since August 2020. However, this analysis does not consider the effects of native Ethereum staking.
Data from DefiLlama shows a 4% decrease in total value locked (TVL) on Ethereum DApps compared to two months earlier. In contrast, TVL on the Tron network increased by 13% during the same period. Additionally, DApps activity on the Ethereum network has decreased by 3%, while Solana’s top applications saw an 18% increase in active users.
Increased User Deposits at Exchanges
On-chain activity indicates an increase in user deposits of ETH at exchanges. Although this doesn’t necessarily indicate short-term selling, analysts view it as a precautionary measure. The daily ETH deposit average of 255,614 represents a 30% increase from two weeks earlier, suggesting that holders may be more inclined to sell as Ether’s price approaches $1,900.
Hot Take: Ether’s Resistance at $1,900 Remains Strong
The combination of regulatory hurdles, ecosystem centralization critiques, underperformance compared to altcoins, high gas fees, reduced TVL and DApps activity, and increased ETH exchange deposits all contribute to the challenge of breaking the $1,900 resistance for Ether. For now, Ether bears can take a breath as the price level proves to be more challenging than expected.
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