Ethereum Price Analysis: Why Is ETH Underperforming This Year?
TLDR
The price of Ethereum (ETH) fell 5.2% during the period of September 3-4, when it faced resistance at $2,550, the price of Ethereum (ETH) is low. Bubbles Are More Concerns ETH price is trying to recover but faces resistance around $2,400-$2,440
Ethereum, the second largest by market capitalization, has underperformed the broader crypto market in recent weeks. This article examines the factors contributing to ETH's price struggle and attempts to recover.
Between September 3 and 4, the price of Ethereum decreased by 5.2%, meeting strong resistance at the level of $ 2,550. The cryptocurrency has failed to close above this price point for eight consecutive days, raising concerns among traders.
As of the latest data, ETH is trading below $2,440 and the 100-hourly simple moving average.
The price is currently trying to recover as it has broken above the $2,365 and $2,380 resistance levels. However, it faces significant hurdles near the $2,400 mark, at which point it has a bearish trend line as resistance.
Factors contributing to ETH's underperformance
Declining Network Fees: Ethereum network fees have dropped to their lowest level in four years. It reached $3.1 million in the week ending August 31. Network security. Weak spot ETF demand: Ethereum spot ETF products have seen massive inflows, with $47 million left on September 3 alone. Since their US market launch on July 23, these devices have generated $475 million in export revenue, indicating a lack of institutional interest. Low Inflation Rate: Ethereum's relatively low inflation rate of 3.2% makes it less attractive compared to most US government bonds. This disappointed investors who were expecting higher yields.
Macroeconomic factors and tech sector concerns
The broader economic landscape is also influencing Ethereum's performance:
Federal Reserve Policy: Uncertainty surrounds the US Federal Reserve's potential rate cut, which is expected to begin in September. While a more expansionary monetary policy will mostly support risk-averse markets, a declining recession threat could steer investors toward safer assets. Tech Stock Volatility: Concerns about a tech stock bubble, exemplified by Nvidia's recent $279 billion market cap loss, are creating anxiety in the crypto market. As Ethereum is often linked to tech stocks, this volatility can affect its price.
Recovery attempts and future perspective
Despite these problems, Ethereum is trying to recover. The price has risen above the 23.6% Fibonacci retracement level of the recent downward move. However, for a significant upside, ETH needs to clear the $2,440 resistance level.
If Ethereum fails to break through this resistance, it may face further decline at the $2,365 and $2,350 support levels. A move below these levels could push the price towards $2,310 or even $2,250 in the near term.
