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Cryptocurrencies continue to spend the weekend calmly. BTC finds buyers at the $28,000 level. Although it cannot exceed the critical level of $28,300, the fact that the BTC price is hovering around the limit gives hope to investors. However, the US inflation data, which will be announced after days, may result in losses for investors.
Why Isn’t Ethereum (ETH) Reaching $2,000?
The price of ETH Coin increased by 35 percent in 2023, but the psychological resistance level of $2,000 has not been permanently surpassed despite many attempts. Moreover, a significant portion of altcoins have achieved much greater gains this year.
So, what are the reasons why the price of Ether cannot surpass this psychological resistance level despite many attempts?
ETH Price Bear Fractal
The movement of the altcoin king this year resembles its movement around $425 in 2018-2019. In both cases, Ether struggles to close above the 0.236 Fib line of the Fibonacci retracement graph. In 2018-2019, the 0.236 Fib line was close to $425 and limited Ether’s recovery attempts. In 2023, the same line is in the $2,000 region.
Increasing Strength of the US Dollar
The increase in DXY affects the entire market and has also reduced the demand for Ether. In 2023, the weekly correlation coefficient between Ether and the US dollar index (DXY) continuously suppressed the price.
According to CoinShares’ weekly report, due to investors’ shift to safer havens, net capital held by Ethereum-related investment funds has decreased by $114 million so far in 2023.
Additionally, the fact that the daily trading volume of ETH ETFs, which were opened for trading on Monday, reached a meager $2 million, was an indicator of weak risk appetite.
Ethereum Network Activity
TVL has decreased from 18.41 million ETH to 12.79 million ETH so far in 2023. Network activity is decreasing, and transaction fees for ETH reached their lowest level of the year on October 5th. The decrease in transaction fees also negatively affects the burning rate. While inflation has turned negative with the transition to PoS, it has returned to positive in the 30-day period.
If network activity remains weak, Ether’s supply will decrease and demand will have to increase. This means that the price needs to fight inflation as well.
