Ethereum (ETH) price stays below $2000 despite Bitcoin's rally – and here's why
Date: 2023-07-01 Author: Karina Ziganova Categories: BLOCKCHAIN
Ethereum is still trading below the $2000 mark, despite a sharp 15% increase in the global market capitalization of cryptocurrencies (TOTALCAP).
The readings of key on-chain metrics and the general market sentiment suggest that investors' attention is focused on bitcoin (BTC) and institutional applications for spot exchange-traded funds. Let's figure out how a change of focus can affect the price of ETH.
The number of transactions on the Ethereum network begins to decline
Fluctuations in user activity are one of the key factors that have slowed down the ETH price rally in recent weeks. According to IntoTheBlock, the network is failing to sustain a steady increase in transaction volume, despite renewed interest from institutional investors.
The chart below shows the sharp fluctuations in transaction volume in June 2023. So, on June 5, Ethereum users transferred 3.98 million coins. After that, the indicator formed a series of zigzag patterns until it reached 1.86 million ETH again on June 28.
The volume of transactions gives an idea of changes in the economic activity of network participants in real time. Its growth puts upward pressure on the price of the token.
More than 20% of Ethereum's circulating supply is currently locked in smart contracts. As such, most investors are interested in earning passive income from staking. If the number of transactions continues to decline, the price of ETH will face new hurdles.
Investors' attention is focused on spot bitcoin ETFs
In addition, Ethereum is significantly inferior to bitcoin in the struggle for the attention of investors. The Social Volume indicator tracks the number of mentions of the project in social networks and the media. In the period from June 7 to June 29, it sank by 86% - from 11,959 to 1655.
Fluctuations in transaction volumes and a drawdown in social sentiment may cause the price of ETH to continue to move at a relatively slow pace.
Ethereum price is consolidating around $1900
Given the above-mentioned factors, the price of ETH is likely to consolidate around $1900 in the coming days. As you can see in the chart below, 2.3 addresses that bought 1.52 million coins at an average price of $1,908 will slow down the upward movement.
If Ethereum overcomes this zone, it will face another major resistance around the $2000 mark. 660,000 investors who bought 26 million tokens can take profits on the way to these values.
In the event of a fall below $1800, the initiative will go to the bears. 3.39 million wallets that purchased 11 million ETH at an average price of $1,803 will support the asset. However, in case of failure, it will face a further decline to $1700.
