The price of Ethereum’s native token, Ether, has been wrestling with the $2,000 mark for quite a while. The digital currency has seen around 35% growth so far in 2023, yet its attempts to breach the $2000 level have been met with staunch resistance. Delving into the reasons behind ETH’s struggle to break through this significant benchmark draws attention to the delicate dance between balanced optimism and cautious skepticism.
Many seasoned observers have noted how Ethereum’s difficulties echo its struggle near the $425 mark in 2018-2019, drawing parallels between the two situations. In both cases, Ethereum seemed staged for recovery but was held back by its 0.236 Fib line of the Fibonacci retracement graph, which acted as a ceiling. The same line seems to be causing the hurdle for ETH now, matching the $2000 figure and pushing the price down.
However, Ethereum’s predicament goes beyond technical levels. The strength of the U.S. dollar against the backdrop of economic recovery has likely played a role in curbing Ethereum’s rise. A persisted negative correlation exists between the U.S. dollar and leading cryptocurrencies, and a stronger dollar often means depressed demand for cryptocurrencies like Ethereum.
Furthermore, the Bitcoin factor cannot be overlooked. Amid the current hype surrounding the Bitcoin Exchange-Traded Fund (ETF), Ethereum has found itself lagging behind BTC. The recently tracked ETH/BTC pair is down 20% year-to-date, suggesting that the market momentum is not in Ethereum’s favor against the flagship cryptocurrency.
Notably, the Ethereum ecosystem’s total-value-locked (TVL) has slipped from 18.41 million ETH to 12.79 million ETH in 2023. This significant reduction heralds lesser availability of funds and lower yields for investors. This financial strain is further reflected in the Ethereum network’s declining gas fees, reaching a yearly low on Oct. 5. Ethereum’s Non-Fungible Tokens (NFTs) volumes and unique active wallets have also seen downward trends, shedding 30% and 16.5% respectively in the last 30 days according to Dapp Radar.
Nonetheless, the potential for a rebound remains, which draws attention to Ethereum’s 50-day exponential moving average (EMA) near $1665. Short-term, a break above the 50-day EMA could drive the price towards the upper trendline of the ongoing ascending triangle pattern. More broadly though, ETH’s price still flirts with a bearish continuation that could see its prices fall to levels between $1465 and $1560 in October 2023.
This analysis serves as a mandate for investors to tread cautiously while making decisions, considering not only current market indicators but also past metrics and their implications on future market movements.
Source: Cointelegraph
