What’s Stopping Ethereum Price from Breaking $1,970?

Ether (ETH) price hit a wall at the $1,970 level on July 3, as a combination of potential interest rate hikes in the coming months and a stricter regulatory environment for cryptocurrencies put a cap on the rally. Crypto enthusiasts are keeping a close eye on the latest crypto news, crypto predictions, and crypto.com for more information about the crypto currency market.

Voyager crypto, luna crypto, celsius crypto, and other crypto services are all trying to stay ahead of the latest crypto trends, while investors are looking for the best ways to invest in crypto now.

Macro headwinds from the Fed

The June rally in the Ethereum network was put in check due to external factors as well as withdrawals from its smart contract applications.

Investors are now wondering if the tailwinds from Bitcoin’s (BTC) ETF requests have already dissipated, leading to a possible correction to the $1,700 level that was seen on June 16.

Recent macroeconomic events can give us some insight, such as the US Gross Domestic Product increasing by an annualized 2% in the first quarter, Germany’s Consumer Price Index rising 6.8% in June compared to the previous year, and China Caixin’s global services purchasing managers’ index (PMI) showing activity expansion.

These strong economic indicators have caused investors to anticipate more tightening measures from the US Federal Reserve.

Fed Chair Jerome Powell’s suggestion of two more interest rate hikes in 2023, along with the higher cost of capital and higher returns on fixed-income investments, has caused a decrease in interest in celsius crypto, crypto currency, crypto.com, crypto now, crypto predictions, crypto today, luna crypto, and voyager crypto.

On the regulatory front, the most pressing news and events included:

TVL nears 3-year lows as network demand falls

Vitalik Buterin, co-founder of Ethereum, recently revealed that he does not stake all of his Ether due to the difficulties associated with multisignature wallets, which may be indicative of the struggles the network is facing.

On July 4, DefiLlama reported that the total value locked (TVL) in Ethereum’s smart contracts had dropped to 13.7 million ETH, its lowest point since August 2020. This decrease in the TVL suggests that either investors are losing interest in the Ethereum network or have moved to layer-2 solutions to avoid high transaction fees. Either way, this could be seen as bearish for the crypto currency.

ETH price gains fueled by leveraged longs

Analyzing the positions of professional traders in ETH derivatives is crucial to determine the likelihood of Ether’s price surpassing the $1,970 resistance level.

There are occasional methodological discrepancies between different exchanges, so readers should monitor changes instead of absolute figures.

Despite Ether trading within a narrow range of $1,815 to $1,975 since June 22, professional traders have increased their leveraged long positions in futures, as indicated by the long-to-short ratio.

At crypto exchange Binance, the long-to-short ratio sharply increased, from 1.14 on June 20 to 1.30 on July 4. Similarly, at OKX, the long-to-short ratio also increased from 0.76 on June 20 to a 2.25 peak on July 4, favoring leveraged longs.

To exclude externalities that might have solely impacted the Ether futures, one should analyze the ETH options markets. The 25% delta skew indicator compares similar call (buy) and put (sell) options and will turn positive when fear is prevalent because the protective put option premium is higher than the call options.

The skew indicator will move above 8% if traders fear an Ether price crash. On the other hand, generalized excitement reflects a negative 8% skew.

As displayed above, the delta skew flirted with moderate optimism between July 3 and July 4, but was unable to sustain such a level. Presently, the negative 2% metric displays a balanced demand for call and put options.

The crypto market is ever-evolving and investors should stay up to date with the latest crypto news, predictions, and trends. Crypto.com, Voyager Crypto, and Celsius Crypto are some of the most popular platforms to get the latest crypto news and insights.

ETH at $1,700 might be distant, but so is $2,000

The Bitcoin ETF saga might have a positive impact on ETH price, however, increased leverage long-to-short ratio, declining TVL, potential interest rate increases, and tighter cryptocurrency regulation may be hindering the crypto bulls. Thus, the bears have better chances of holding off the $1,970 resistance.

The latest crypto attempt to break $2,000 on April 13 was short-lived, which further strengthens the bearish outlook. Therefore, it may be difficult for ETH to reach $1,700 in the near future.