Ether’s price has encountered resistance at the $1,970 level on July 3 due to several factors hindering its rally. Let’s explore four key reasons why Ether’s price struggles to break through this resistance.
- Economic Indicators and Interest Rate Hikes: Strong economic indicators, such as U.S. GDP growth, Germany’s Consumer Price Index increase, and China’s activity expansion, have raised expectations of further tightening measures from the U.S. Federal Reserve. Fed Chair Jerome Powell’s mention of potential interest rate hikes, along with rising returns on fixed-income investments, has diminished interest in cryptocurrencies.
- Regulatory Challenges: Recent regulatory events have impacted market sentiment. The European Union’s Data Act imposing requirements on smart contracts and the ongoing probe into Binance Australia’s derivatives business contribute to a tighter regulatory environment for cryptocurrencies.
- Ethereum Network Challenges: The Ethereum network itself faces challenges, including co-founder Vitalik Buterin’s statement about not staking all his Ether due to complexities with multisignature wallets. Additionally, the total value locked (TVL) in Ethereum’s smart contracts has decreased, possibly indicating waning interest or a shift to layer-2 alternatives for lower transaction fees.
- Professional Traders’ Positions: Analyzing professional traders’ positions in ETH derivatives reveals an increased leveraged long-to-short ratio. This suggests a greater interest in leveraged long positions, indicating bullish sentiment in futures markets.
Considering these factors, Ether bears are better positioned to hold back the positive price impact from the Bitcoin ETF saga. While these obstacles may not push ETH’s price down to $1,700, they present significant challenges for ETH bulls. Previous attempts to break $2,000 have been short-lived, indicating the short-term advantage for bears in defending the $1,970 resistance.
In conclusion, the confluence of economic indicators, regulatory challenges, network dynamics, and professional traders’ positions presents formidable barriers for Ether’s price to break through the $1,970 level. Monitoring these factors is essential to understanding the short-term price dynamics of Ether.
Note: Due to occasional methodological discrepancies, it’s advisable to track changes rather than rely solely on absolute figures in ETH derivatives markets.