Ether (ETH) has seen a setback in its upward momentum, with technical and on-chain analysis indicating that it may continue to trade below the $2,000 mark in the near future. Despite this, the presence of solid fundamentals and a lack of significant selling pressure could help prevent drastic drops in Ether’s price.
Challenges Encountered by Ether in its Price Surge
ETH/USD has witnessed a 42.80% increase since the beginning of 2023 driven by factors such as a short squeeze in the altcoin market, negative sentiment among investors, and low liquidity. However, the current rally seems to have stalled at a pivotal point where bulls and bears are evenly matched.
One key indicator, Glassnode’s Relative Unrealized Loss metric, shows that Ether holders are at a crucial juncture, with consolidation above a specific level indicating bearish trends. On the technical front, Ether has struggled to break through resistance at 0.082 Bitcoin (BTC), leading to a return to a trading range between 0.053 BTC and 0.082 BTC.
What Lies Ahead for Ether?
Historical data reveals that Ether has not reached the previous lows by a significant margin, indicating potential further downside for ETH holders. Nonetheless, on-chain activity and buying interest have been robust, mitigating potential risks.
A comparison with previous bear markets shows a shift in Ether’s exchange flows, with outflows exceeding inflows in the current scenario, suggesting reduced selling pressure. The percentage of Ether locked in smart contracts has remained stable, indicating a lack of significant withdrawals.
Ether’s network has undergone significant upgrades, including the move to proof-of-stake and the implementation of Ethereum Improvement Proposal 1559, making the asset more environmentally friendly and decreasing inflation. However, institutional investment in Ether remains limited, with investors favoring Bitcoin due to regulatory uncertainties and scalability challenges faced by Ethereum.
Issues such as high gas fees on the Ethereum network and regulatory actions like the SEC’s fine on Kraken have hindered institutional interest in Ether. Despite advancements in layer-2 solutions, institutions remain cautious, waiting to see how the crypto space evolves.
This article reflects the author’s opinions and does not necessarily represent those of Cointelegraph. It does not provide investment advice, and readers are urged to conduct their own research before making any financial decisions.
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