As Ethereum (ETH) battles stormy seas in the crypto market, a gloomy cloud hangs over its bullish forecast. The price of the second largest cryptocurrency recently dropped dramatically below $1,900, shaking the faith of even its most ardent supporters. The recent meeting of the Federal Open Market Committee (FOMC), which hinted at possible rate hikes, is a key factor driving Ethereum’s sharp decline. This, coupled with Ethereum’s bearish network activity, makes the $2,000 target seem further and further away.
Ethereum’s TVL continues to decline
The Ethereum network appears to be grappling with obvious hurdles, highlighted by co-founder Vitalik Buterin’s admission on June 29 that he’s not betting all of his Ether because of the intricacies of multi-signature wallets.
The Total Value Locked (TVL) – a metric that quantifies deposits in Ethereum’s smart contracts – has fallen to its lowest level since August 2020. In this month, the TVL experienced a 3% dip, amounting to just 13.6 million Ether, as reported by DefiLlama.
A reduced TVL may indicate that investors are either losing confidence in the usefulness of the network’s smart contracts or are migrating to tier-2 options for lower transaction costs. Both scenarios imply a detrimental impact on potential demand for the Ethereum network, a factor currently viewed from a bearish perspective.
On the other hand, bulls are still trying to hold the ETH price as the asset goes through a wave of bullish developments. On-chain analytics firm Santiment reports that Ethereum’s network growth, as measured by new address creation, is at its highest level in four months.
The Ethereum network has been expanding recently, indicating faster creation of new addresses. However, reaching the $2K mark could take a month for ETH price amid bearish macro events.
Will ETH price drop to $1,700?
Ethereum recently dropped from its $2,000 resistance point, suggesting active bearish control at this level. The price further accelerated its bearish rally and broke below $1.9K, triggering a spike in selling pressure.
For further consolidation between $2,000 and $1,600, the bears should hold the price below the moving averages. At the time of writing, ETH price is trading at $1,870, down more than 0.8% in the past 24 hours.
If bears can successfully push the price below 23.6% Fib channel at $1,821, it will gain momentum for a trend towards the bottom of $1,761. Bears are likely to further consolidate price to eliminate hopes of reaching $2K.
On the other hand, a rebound from the $1,760 could indicate a shift to positive sentiment with traders buying into the dips, increasing the likelihood of crossing the $2,000 mark. This could potentially send the ETH price towards the $2,180 level.