Ethereum’s recent price performance has been anything but stable. The asset keeps oscillating between short-lived spikes and price corrections, keeping everyone on the edge of their seats. The current volatility and the mixed signals that Ethereum has been showing as of late are neither uncommon nor surprising, given the present state of the crypto market.
However, what makes Ethereum’s trajectory particularly interesting at the moment is the ongoing struggle to stay above the $3K resistance level. The Ethereum price chart shows that ETH is currently standing at $3,920, with a market capitalization of $472.21B. Since reaching peak levels close to its former all-time high back in March, Ethereum has been on a downward trend, mostly trending below the $3000 level.
The asset made several forays above $3K but unfortunately, none of these spikes developed into a sustained appreciation, being cut short by a price correction at each turn. On May 17, Ethereum managed to once again top the $3K threshold, following an increase of 1.4%, after weeks of being in limbo. While this is definitely a positive development for the main altcoin, its recent struggle around this resistance level is keeping traders and investors from fully celebrating the recent rally.
Even if Ethereum is trading in the green right now, the asset is not out of the woods yet as its future remains uncertain. It can be said that Ethereum is now at a crossroads; the path it’s going to take now could be decisive for its price outlook moving forward.
Ethereum Continues to Lag Behind Bitcoin
When taking a step back and looking at the broader picture, we can see that Ethereum has failed to impress during the last bull cycle. While Bitcoin exceeded all expectations and managed to surpass its previous all-time high much earlier than anticipated, Ethereum remained 40% below its peak value even when it put in the best performance of the year.
One could argue that Ethereum falling behind Bitcoin is a tale as old as time, or at least as old as the altcoin’s existence since this is a pattern that has repeated constantly throughout the assets’ longstanding rivalry. Nevertheless, the fact that Ethereum is unable to keep up with the market leader, further deepening the gap between the two, is not making the crypto any more appealing for traders and investors.
The overall sentiment for Ethereum is decisively bearish. It’s understandable that investors are keeping a cautious stance, given the assets’ inability to consolidate. In terms of year-to-date gains in 2024, Ethereum is 72% below Bitcoin.
Uncertainty Still Looms Large
With Ethereum navigating troubled waters, traders and investors are wondering whether its recent climb above $3K is going to end like all other or this time the altcoin is going to defeat the bears and move further towards new levels. The most accurate response is that anything could happen at this point.
As is usually the case, the most recent crypto rally that drove Bitcoin to new record figures and pushed Ethereum beyond the 3K mark was prompted by a combination of factors. However, the biggest influence came from the political sphere. The optimism sparked by the outcome of the US elections was arguably the main driver of growth for the crypto market and Ethereum was a direct beneficiary of it.
Excitement was already building up in the lead-up to the presidential elections, causing crypto prices to rise across the chart. After the official results came in on November 6th, announcing the victory of Donald Trump, the enthusiasm of crypto supporters escalated, and the Trump effect is still in full swing. With a president-elect who seems to be in favor of crypto, the expectation is that under Trump’s second administration, digital currencies will benefit from friendlier regulations, which would help them advance toward mainstream acceptance. Central banks’ decision to ease monetary policies has also contributed to the bullish momentum of the past months, shaping a positive outlook for the crypto industry.
However, Trump hasn’t given any indications of specific crypto policies that he intends to introduce in the future. Until explicit crypto measures are proposed and implemented, these optimistic expectations have no solid grounding, relying more on wishful thinking. Therefore, when the initial enthusiasm induced by the elections dies out, the price growth might also come to a halt, and Ethereum, along with all the other crypto assets, could take a nosedive. This could push Ethereum on a downward spiral again, compromising its chances of recovery.
Fortunately, it’s not all doom and gloom for Ethereum. Certain indicators show there is still hope for Ethereum to wake up from its slumber and turn on its engines. Glassnode data reveals a significant increase in the number of new Ethereum addresses, which now amount to 160,000 compared to not even 100,000 registered in January. This surge could signal an increased interest in the altcoin, which might precede a rise in investment levels.
While Ethereum is at a critical junction in its journey, fighting against bearish trends and struggling to maintain momentum above the critical price level of $3000, a recovery is not out of the question. Whether the leading altcoin is going to prove naysayers wrong and continue to rise or fall back as a result of a price correction is anybody’s guess.
It all seems to depend on conditions in the broader economic landscape, which is looking quite uncertain at the moment. This gives traders and investors all the more reasons to practice caution and be extra careful when assessing their options, especially when it comes to Ethereum.
