3 reasons why the price of Ethereum will not break 2 thousand dollars
The value of Ethereum's native token Ether (ETH) has gained about 35% so far in 2023. But his attempts to break more than $ 2,000, the level of psychological resistance, strong depression rejection has been seen many times.
Let's take a closer look at three possible reasons why the price of Ethereum has failed to decisively recapture $2,000 since May 2022.
Ethereum price colors bear cycle fractal
Ethereum's failure to break above $2,000 in 2023 parallels its decline near $425 in 2018-2019.
In both cases, Ether appears to be in a recovery phase, approaching above the 0.236 Fib line of the Fibonacci retracement graph.
In 2018-2019, the 0.236 Fib line was near $425 and was instrumental in limiting Ether's recovery attempts. In the year In 2023, the same line is close to $2,000, forcing itself again as a selling point and, thus, lowering the price of ETH.
Strong US dollar, Bitcoin
A strengthening US dollar has dampened demand for Ethereum in recent months, reducing its ability to close above $2,000.
The negative correlation between major cryptocurrencies and the dollar is the main culprit. In 2023, in particular, the weekly correlation between Ether and the US Dollar Index (DXY) is consistently negative as shown below.
Meanwhile, Ethereum underperformed Bitcoin due to the ongoing Bitcoin ETF boost in 2023. For example, the widely watched ETH/BTC pair is down 20% year-to-date (YTD).
Additionally, the net capital held by Ethereum-bound investment funds has decreased by $114 million so far in 2023, according to CoinShares Weekly. In comparison, Bitcoin-based funds attracted $168 million in the same period.
Related: Time to ‘Pull the Brakes' on Ethereum and Spin to Bitcoin: K33 Report
Ethereum network activity drops
JP Morgan analysts recently warned that Total Value Locked (TVL) in the Ethereum ecosystem has dropped from 18.41 million ETH to 12.79 million ETH in 2023 so far. .
Falling TVL has seen a decline in Ethereum network gas fees, which hit a yearly low on October 5.
The #Ethereum network was particularly cheap to use, and this week's average payout rate of $1.13 was the lowest since November, 2022. Although by no means a perfect signal, $ETH spending generally results in utility increases and price improvements. pic.twitter.com/PEGpXMmZ3q
— Santiment (@santimentfeed) October 4, 2023
Ethereum NFT volumes and unique active wallets have also decreased by 30% and 16.5% in the past 30 days, according to DappRadar.
That includes failures in key metrics for popular apps, including decentralized exchange Uniswap V2, DEX aggregator 1inch Network, Ethereum shareholder Lido, and others.
Ethereum technical analysis
Ethereum price technicals show a potential retracement of the 50-day moving average (50-day EMA, red wave) near $1,665.
However, looking more broadly, ETH/USD is suffering from a bearish continuation pattern called an ascending triangle.
As a result, a break below the lower trendline of the triangle has the same risk of crashing the price as the high of the pattern. In this case, the price of ETH may drop to $1,465 and $1,560 in October 2023, depending on the split point.
Short-term, a break above the 50-day EMA could lead ETH price to a triangle upper trend towards $1,730 in October 2023, which coincides with the 200-day EMA (the blue wave).
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
