Due to the difficulty in breaking through $2000 in Ethereum prices, some bearish signs and lower online activity indicators echo each other.Ethereum's native token, Ether, has risen by approximately 35% so far in 2023
Due to the difficulty in breaking through $2000 in Ethereum prices, some bearish signs and lower online activity indicators echo each other.
Ethereum's native token, Ether, has risen by approximately 35% so far in 2023. However, it has been trying to break through the psychological threshold of $2000, but has been strongly bearish rejected multiple times.
Now, we will conduct a detailed analysis of three possible reasons why Ethereum prices have not firmly stood at $2000 since May 2022.
Ethereum prices depict the fractal of bear market cycles
Ethereum failed to break through $2000 in 2023, similar to the period from 2018 to 2019 when prices were around $425 and were rejected by bearish sentiment.
ETH/USD Weekly Price Chart
In both cases, Ethereum appears to be in the recovery phase and is particularly focused on the 0.236 Fibonacci line above the Fibonacci withdrawal chart.
Looking back from 2018 to 2019, the Fibonacci line of 0.236 was close to $425, which helped limit Ethereum's attempts at recovery. By 2023, the line will approach $2000 and once again become a selling area, posing downward pressure on ETH prices.
US dollar and Bitcoin strengthen
In recent months, Ethereum's demand has been constrained by the strengthening US dollar, making it difficult for its price to exceed $2000.
The main reason for this situation is the widespread negative correlation between top-level cryptocurrencies and the US dollar. Especially in 2023, the weekly correlation coefficient between Ethereum and the US dollar index (DXY) remained negative.
ETH/USD and DXY weekly correlation coefficient chart
At the same time, although spot Bitcoin ETFs have been highly anticipated, Ethereum's performance in 2023 is relatively poor, especially compared to Bitcoin. The price performance of Ethereum compared to Bitcoin can be measured by the decline of the ETH/BTC currency pair, which has fallen by 20% so far this year.
In addition, according to CoinShares' weekly report, as of 2023, the net capital of Ethereum related investment funds decreased by $114 million. At the same time, Bitcoin based funds attracted $168 million in inflows during the same period.
Ethereum Network Activity Decline
By 2023, the total locked in value (TVL) of the Ethereum ecosystem has decreased from 18.41 million ETH to 12.79 million ETH. This reflects a decrease in the supply of funds, leading to a decrease in investors' returns, as recently warned by analysts at JPMorgan Chase.
Ethereum TVL since 2019
As the gas cost of the Ethereum network reached its annual low point on October 5, 2021, the total lock in value (TVL) of DeFi applications also showed a downward trend. According to DappRadar's data, the number of NFTs and active wallets on Ethereum has also decreased by 30% and 16.5% in the past 30 days, respectively.
This downward trend has affected some popular DeFi applications, including decentralized exchange UniswapV2, DEX aggregator 1inchNetwork, and Ethereum pledge provider Lido.
Ethereum Technology Analysis
At the same time, Ethereum's prices are showing signs of rebound on a technical level and may attempt to reach a 50 day moving average of around $1665 (50 day EMA, red wave).
However, from a broader perspective, ETH has been in a downward trend, forming an upward triangular pattern.
Therefore, if the downward trend line of the rising triangle is broken, it may lead to a significant drop in prices, and the target range will be between $1465 and $1560 in October 2023, depending on the location of the collapse point.
ETH/USD Daily Price Chart
In the short term, if successfully breaking the 50 day moving average, ETH prices may rise to the upper trend line of the rising triangle near $1730 in October 2023, consistent with the 200 day moving average (blue wave).
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