Ethereum price is up only 11% since the start of 2024. This uninspiring 2024 performance has caused investors to discard ETH as it trades around $2,531. While investors have already fled to look for a better alternative, let’s breakdown why ETH price is stuck below $3,000.
ETH price today is up 0.73% and currently trades at $2,549. This recent uptick is a common theme noted across the weekend after a string of selloffs in the past week.
Ethereum price today
While ETH price today might seem bullish, investors need to be careful as Monday moves are often fakeouts and the gains cold come undone.
Understanding Why Ethereum Price is Stuck Below $3,000
While there are multiple factors at play here, here are five reasons why Ethereum price seems to be trading under $3,000.
Launch of Spot Bitcoin ETFs: The launch of spot Bitcoin ETF and backing from BlackRock, one of the world’s largest asset manager, caused a lot of institutional interest and capital to flow into BTC, leaving behind ETH. This outlook further explains why Ethereum price has failed to flip the $3,000 psycholgoical level into a support floor.
Ethereum’s Complex Narrative: The second reason can be attributed to ETH’s ‘world computer’ or ‘smart contract’ narrative, which is hard to sell to baby boomers, aka institutions. Bitcoin’s narrative is simple – digial gold. If this does not work, then BTC can also be packaged as an inflation hedge or uncorrelated asset. Either way, these narratives are easy to sell as opposed to Ether’s smart contract technology. This outlook is apparent when looking at cumulative spot Ethereum ETF inflows which is close to half a billion US dollar.
Ethereum ETF vs Bitcoin ETF inflows
Solana’s Meme Coin Explosion: After the FTX crash, Solana, a well-known Venture Capital coin at the time, fell hard, but the crypto market viewed this as an opportunity to accummulate SOL This kickstarted the Solana narrative that propelled it $210 in March 2024. Solana is also a well-known competitor to ETH and is often termed as “Ethereum-killer.” Tying up the massive opportunities on the Solana blockchain and better and faster transaction fees and speed relative to Ethereum helped onboard more retail, leading to massive capital inflow to SOL, leaving ETH behind.
Constant Selling Pressure: The aforementioned external reasons were enough to keep Ethereum price moving higher, but Ethereum Foundation’s constant selling pressure added to ETH’s woes. To put this selling spree into context, the foundation has sold 65,000 ETH in the past 500 days, leaving the foundaiton’s balance at 271K as of October 25, 2024 form a peak of 336K in May 2023. At the current low price of $2,500, 65,000 ETH is worth $162 million.
Competition from Layer 1: While Layer 1 blockchains and tokens were designed to take the load off the main Ethereum chain, they have stifled ETH’s growth. Many of these chains like Uniswap, Polygon, etc., have siphoned massive liquidity away form the main chain and has negatively impacted the fundamental aspect of ETH. The recent announcement of Unichain from Uniswap, caused a lot of speculation on how it could negatively impact ETH’s revenue model.
Is Ethereum Ready to Skyrocket Higher?
Regardless of the lackluster performance in the past ten months, ETH could be forming a macro bottom. If the Ethereum price forecast is true and history repeats, Ether could be gearing up for a massive rally to new all-time highs.
ETH Macro Bottom Fractal
If true, there are two possibilities:
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). 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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