Ethereum (ETH) has not kept up with Bitcoin’s growth over the last week the way it normally would. While the largest cryptocurrency by market cap has now broken above $30,000, ETH is still trending below $2,000, a price point that should’ve already been broken given the current recovery trend in the crypto market. So why is Ethereum still trading below $2,000?
Market Waiting Out Ethereum Upgrade
The Ethereum Shapella upgrade is scheduled to take place on April 12 and anticipation around the upgrade is already building. However, instead of pushing the price of the digital asset up as expected, it seems investors are waiting to see the outcome of the upgrade instead before making a decision.
Usually, Ethereum is hot on the heels of Bitcoin and mirrors most of the moves the pioneer cryptocurrency makes. But this time around, ETH has barely kept up, and even with Bitcoin’s break above $30,000, which should’ve seen ETH beat $2,000, the second-largest cryptocurrency by market cap is still trading below this important level.
A good reason for this slow growth is that Shapella would bring about withdrawals from the Ethereum staking contract. With over $34 billion staked, tensions are high regarding how much ETH will be sent back into circulation once withdrawals are opened. Despite the staggered withdrawals, there will still be a good amount of ETH being withdrawn which would go straight into the market, increasing supply in a market already struggling with low demand.
Withdrawals of staked ETH have to wait to be processed to mitigate an exodus and worse security for Ethereum. Partial withdrawals would take 4-5 days, while it's projected to take ~100 days for 1/3 of full withdrawals to happen, translating into $80M-$100M of $ETH being… https://t.co/4mV4JDXk3t
— IntoTheBlock (@intotheblock) April 10, 2023
Fears around this new supply could be behind the price of ETH still trailing behind $2,000. If investors and traders are not convinced that there would be enough demand to mop up the new supply, then money will continue to flow out of ETH, and beating $2,000 becomes even harder.
ETH Bulls Remain Strong
Despite the uncertainty around the Shapella upgrade and what withdrawals would mean for Ethereum, bulls have still remained firmly in control of the price action. There has been mounting buy pressure at $1,900 which has worked to turn this resistance into support for the digital asset.
The next major resistance for ETH now lies at $1,950 but since bulls have managed to maintain a price above the 50-day and 100-day moving averages, the possibility of ETH breaking above this level is quite high. Once this resistance is beaten, then ETH will quickly retake $2,000.
ETH continues to trend below $2,000 | Source: ETHUSD on TradingView.com
However, if it were to lose its footing at $1,900 once more, then support is much lower for the cryptocurrency, sitting just above $1,800. So right now, it is more important to hold $1,900 or ETH risks falling into a bearish trend once more.
ETH is still holding at a price of $1,917 at the time of this writing. It is seeing minor gains of 3.14% in the last 24 hours, and 4.95% gains in the last seven days.