3 reasons why Ethereum price can’t break $2K

The price of Ethereum's native token, Ether (ETH), has gained around 35% so far in 2023. But its attempts to break above $2,000, a psychological resistance level, have witnessed strong bearish rejections multiple times.

Let's take a closer looks at the three likely reasons why Ethereum price has failed to decisively retake $2,000 since May 2022.

Ethereum price paints bear cycle fractal

Ethereum's inability to cross above $2,000 in 2023 resembles the bearish rejection near $425 in 2018-2019.

In both cases, Ether appears to be in a recovery phase while eying close above its 0.236 Fib line of the Fibonacci retracement graph.

In 2018-2019, the 0.236 Fib line was near $425 and was instrumental in limiting Ether's recovery attempts. In 2023, the same line is near $2,000, enforcing itself again as a selling area and, thus, pressuring ETH's price lower.

Stronger U.S. dollar, Bitcoin

A strengthening U.S. dollar has dampened demand for Ethereum in recent months, thus reducing its ability to close decisively above $2,000.

The prevailing negative correlation between top cryptocurrencies and the dollar has been the main culprit. In 2023, in particular, the weekly correlation coefficient between Ether and the U.S. dollar index (DXY) has been consistently negative, as shown below.

Meanwhile, Ethereum has largely underperformed Bitcoin in 2023 due to the ongoing spot Bitcoin ETF hype. For instance, the widely-tracked ETH/BTC pair is down 20% year-to-date (YTD).

Additionally, the net capital held by Ethereum-tied investment funds has dropped by $114 million so far in 2023, according to CoinShares' weekly report. In comparison, Bitcoin-based funds have attracted $168 million in the same period.

Related: Time to ‘pull the brakes’ on Ethereum and rotate back to Bitcoin: K33 report

Ethereum network activity dips

The total-value-locked (TVL) across the Ethereum ecosystem has dropped from 18.41 million ETH to 12.79 million ETH so far in 2023. That underscores a reduced availability of funds, resulting in lower yields for investors, as JP Morgan analysts also warned recently.

The declining TVL has accompanied a drop in the Ethereum network's gas fees, which reached a yearly low on Oct. 5.

#Ethereum's network has been particularly cheap to use, and this week's average fee level of $1.13 is the lowest since November, 2022. Though not a perfect signal by any means, lower $ETH costs generally lead to a rise in utility and price rebound. https://t.co/ymXFwGJh49 pic.twitter.com/PEGpXMmZ3q

— Santiment (@santimentfeed) October 4, 2023

Ethereum's NFT volumes and unique active wallets have also dropped by 30% and 16.5% in the last 30 days, according to Dapp Radar.

That includes declines in the key metrics of popular apps, including decentralized exchange Uniswap V2, DEX aggregator 1inch Network, Ethereum staking provider Lido, and others.

Ethereum technical analysis

Ethereum price technicals meanwhile show a potential rebound toward its 50-day exponential moving average (50-day EMA; the red wave) near $1,665.

However, looking broadly, ETH/USD has been paining a bearish continuation pattern called an ascending triangle.

As a result, a break below the triangle's lower trendline risks crashing the price by as much as the pattern's maximum height. In this case, ETH's price can drop to $1,465 and $1,560 in October 2023, depending on the breakdown point.

Short-term, a break above the 50-day EMA could have ETH's price rise toward the triangle's upper trendline near $1,730 in October 2023, coinciding with the 200-day EMA (the blue wave).

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.