Ethereum Battles Resistance: Analyzing Factors Hindering ETH's Rise above $2,000 in 2023
Summary:
Ethereum's native token, Ether, has seen a 35% increase in 2023, but has struggled to break above the $2,000 resistance level. This obstacle mirrors the bearish rejection near $425 in 2018-2019, and is linked to the 0.236 Fibonacci line. Several factors contributing to this include a strengthening U.S. dollar, underperformances compared to Bitcoin, and a drop in Ethereum-tied investment funds. Additionally, decreased Ethereum network activity, alongside a 30% and 16.5% drop in NFT volumes and unique active wallets respectively, are also noted. Technical analysis suggests a potential rebound or further drop, depending on market movements.
In 2023, Ethereum's token, Ether (ETH), has risen approximately 35%, however, its attempts to surpass the $2,000 mark, a crucial resistance point, have been persistently thwarted. There are three primary factors contributing to Ethereum's struggle to regain a position above $2,000, a milestone it hasn't reached since May 2022.
Ethereum's struggle to push past $2,000 mirrors its failed attempts to break past the $425 mark seen between 2018-2019. Despite bouncing back, Ether is struggling to ascend beyond its 0.236 Fibonacci line. In 2018-2019, this line was situated around $425, obstructing Ethereum's rise. As of 2023, it sits near $2,000 and continues to act as a significant barrier.
The effects of a strengthening U.S. dollar have negatively impacted Ethereum, limiting its capacity to settle decisively above the $2,000 threshold. Throughout 2023, the relation between Ether and the U.S. dollar index (DXY) has revealed a persistently negative correlation, and Ethereum's performance has consistently lagged behind Bitcoin's due to the ongoing Bitcoin ETF hype, with the ETH/BTC pair losing 20% year-to-date.
Simultaneously, Ethereum-tied investment funds have seen a $114 million decrease in net capital in 2023, whereas Bitcoin-based funds have experienced an influx of $168 million.
Moreover, the Ethereum network's activity has declined. The network's Total Value Locked (TVL) was reduced from 18.41 million ETH to 12.79 million ETH in 2023. The declining TVL and Ethereum's gas fees reaching a yearly low signals much cheaper network use. However, lower Ethereum costs can often lead to increased utility and price bounce-back.
Ethereum's Non-Fungible Tokens (NFT) volumes and unique active wallets have seen a drop of 30% and 16.5% within the past 30 days, respectively. This includes dips across well-known applications including Uniswap V2, 1inch Network, the Ethereum staking provider Lido, among others.
Technical analysis of the Ethereum price suggests the possibility of a rebound towards its 50-day exponential moving average (50-day EMA) near $1,665. However, ETH/USD is tracing an upward triangle indicating a bearish continuation pattern. As such, if this lower triangle's trendline is broken, the price could plummet to the $1,465 - $1,560 range in October 2023. Conversely, a short-term break above the 50-day EMA could lead to a rise toward the triangle's upper trendline near $1,730 in October 2023.
Published At
10/7/2023 3:10:56 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.