The price of Ethereum’s native token, Ethereum (ETH), is up about 35% so far in 2023. But its attempts to break above $2,000 (psychological resistance) were repeatedly met with strong bearish rejections.

Let’s take a closer look at three possible reasons why Ethereum price has failed to decisively recapture $2,000 since May 2022.

Ethereum price depicts bear market cycle fractal

Ethereum is unable to break above $2,000 in 2023, similar to the bearish rejection near $425 in 2018-2019.

In both cases, Ethereum appears to be in a recovery phase while closing above the 0.236 Fibonacci line on the Fibonacci retracement chart.

In 2018-2019, the 0.236 Fibonacci line near $425 helped limit Ethereum’s recovery attempts. By 2023, the same line approached $2,000, becoming a sell zone again, pushing the price of ETH down.

Dollar strengthens, Bitcoin

In recent months, a stronger U.S. dollar has dampened demand for Ethereum, reducing its ability to decisively close above $2,000.

The prevalent negative correlation between the top cryptocurrencies and the U.S. dollar is to blame. Particularly in 2023, the weekly correlation coefficient between Ethereum and the US Dollar Index (DXY) has been negative, as shown below.

Meanwhile, Ethereum’s performance in 2023 has largely lagged behind Bitcoin’s due to continued spot Bitcoin ETF hype. For example, the widely tracked ETH/BTC pair is down 20% year-to-date.

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

Related: It’s Time to ‘Put the Brakes’ on Ethereum and Spin Back to Bitcoin: K33 Report

Ethereum network activity drops

By 2023, the total value locked (TVL) of the Ethereum ecosystem has dropped from 18.41 million ETH to 12.79 million ETH. This highlights the reduced availability of funds, leading to lower yields for investors, as JPMorgan analysts also recently warned .

The decline in TVL coincides with a drop in the Ethereum network’s gas fees, which hit a yearly low on October 5.

#Ethereum’s network is particularly cheap to use, with average fee levels this week at $1.13, the lowest since November 2022. While not a perfect signal by any means, lower $ETH costs generally lead to rising utility and price rebounds. https://t.co/ymXFwGJh49 pic.twitter.com/PEGpXMmZ3q

— Santimentfeed (@santimentfeed) October 4, 2023

Ethereum’s NFT transaction volume and unique active wallets have also dropped by 30% and 16.5% over the past 30 days, according to Dapp Radar.

This includes drops in key metrics for popular applications, including decentralized exchange Uniswap V2, DEX aggregator 1inch Network, Ethereum staking provider Lido, and more.

Ethereum technical analysis

Meanwhile, Ethereum price technicals suggest that its 50-day exponential moving average (50-day EMA; red wave) could rebound towards $1,665.

However, looking more broadly, ETH/USD has been suffering from a bearish continuation pattern known as an ascending triangle.

Therefore, a break below the triangle's lower trendline could collapse the price, just as it would the pattern's maximum height. In this scenario, the price of ETH could drop to $1,465 and $1,560 in September 2023, depending on the breakdown.

In the short term, a break above the 50-day EMA could see ETH’s price rise towards the triangle’s upper trendline near $1,730 in October 2023, coinciding with the 200-day EMA (blue wave).

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

Author: Shenlian DCNews

Compiler: Sister Shen

Twitter: DeepChain

Twitter：https://twitter.com/DeepChainUS