5 Reasons Why Ethereum Price is Stuck Below $3,000

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As a seasoned analyst with over two decades of experience in the financial markets, I have seen my fair share of bull runs and bear markets. The current state of Ethereum (ETH) is reminiscent of certain periods in the past where investors were faced with similar uncertainties and doubts.

2024 saw only an 11% increase in the value of Ethereum since its start, which has left some investors feeling underwhelmed and prompting them to abandon ETH as it currently trades near $2,531. Here’s a breakdown of why the price of ETH is struggling to breach the $3,000 mark.

Today, the cost of Ethereum (ETH) has increased by 0.73%, now being valued at approximately $2,549. Over the weekend, this upward trend appears to be a recurring pattern following a series of declines observed in the previous week.

5 Reasons Why Ethereum Price is Stuck Below $3,000

As a crypto investor, I find myself feeling rather optimistic about the current Ethereum (ETH) prices. However, I can’t help but exercise caution since historical trends suggest that Monday price movements may not always reflect genuine bullish momentum. These initial gains could potentially unwind as the week progresses.

Understanding Why Ethereum Price is Stuck Below $3,000

Among the various elements influencing its value, let’s explore five potential explanations for the Ethereum price remaining below $3,000.

Introduction of Spot Bitcoin ETFs: The introduction of a spot Bitcoin ETF, supported by BlackRock – one of the world’s leading asset managers – sparked significant institutional interest and investment in BTC, resulting in a surge that overshadowed Ethereum (ETH). This trend may be the reason behind Ethereum’s failure to establish the $3,000 psychological level as a reliable support base.

As a researcher, I’ve observed that one factor contributing to the comparative performance of Ethereum (ETH) can be traced back to its complex narrative – often referred to as its ‘world computer’ or ‘smart contract’ concept. This narrative, while revolutionary, seems challenging for baby boomers, particularly institutional investors, to grasp and invest in compared to Bitcoin’s (BTC) simpler narrative of digital gold.

5 Reasons Why Ethereum Price is Stuck Below $3,000

The Rise of Solana’s Meme Coin: Following the FTX collapse, Solana, a significant cryptocurrency backed by Venture Capital at the time, experienced a steep decline. However, this fall was seen as an opportunity for investors to buy SOL, which sparked the Solana story that propelled its value to $210 in March 2024. Solana is often compared to Ethereum and dubbed as “Ethereum’s rival.” The vast potential on the Solana blockchain, along with cheaper and faster transaction fees compared to Ethereum, attracted more retail investors, resulting in a significant influx of capital into SOL, leaving Ethereum in its wake.

Continuous Liquidation by Ethereum Foundation: Beyond the external factors that drove Ethereum’s price upward, the Ethereum Foundation consistently selling off their Ethereum (ETH) contributed to its challenges. To provide some perspective, the foundation has offloaded approximately 65,000 ETH within the past 500 days, bringing their holdings down to 271K ETH as of October 25, 2024. This represents a decline from a high of 336K ETH in May 2023. At the current price of $2,500 per ETH, this amount equals an impressive $162 million in liquidated assets.

Competing with Layer 1 Blockchains: Initially intended to reduce pressure on the primary Ethereum network, Layer 1 blockchains and tokens have instead impeded Ethereum’s growth. Platforms such as Uniswap, Polygon, and others, by drawing substantial liquidity away from the main chain, have adversely affected the core aspects of ETH. The announcement of Unichain by Uniswap has sparked much debate over potential negative consequences for Ethereum’s revenue model.

Is Ethereum Ready to Skyrocket Higher?

Disregarding its subpar performance over the last ten months, there’s a possibility that Ethereum might be establishing a significant low point in its broader trend. If Ethereum’s price prediction holds true and history tends to repeat itself, Ether could potentially prepare for a monumental surge towards fresh record highs.

5 Reasons Why Ethereum Price is Stuck Below $3,000

If true, there are two possibilities:

  1. ETH could have set up a cycle bottom on August 4 at $2,127. Such a case would nee a confirmation where Ethereum price crosses above the 200-period Exponential Moving Average (EMA).
  2. On the other hand, if ETH still hasn’t set up a macro bottom, then a correction could be incoming. In this case, a sweep of $2,127 could see Ethereum price retest the $2,100 or $2,000 levels. Even after this correction, Ether needs to decisively breach the 200-period EMA to confirm the start of a bull run.

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2024-10-28 17:16