Ether (ETH) price faced resistance after hitting the $1,970 level on July 3. A number of factors capped the rally, including higher odds of more interest rate hikes in the coming months and a tighter regulatory cryptocurrency environment.
Macro headwinds from the Fed
Besides the external factors, the Ethereum network has faced withdrawals from its smart contract applications, which also put the June rally in check.
Investors now question whether the tailwinds from Bitcoin’s (BTC) ETF requests have faded, opening room for a correction down to the $1,700 level last seen on June 16.
The recent macroeconomic events may provide some hints, including the, U.S. Gross Domestic Product grew by an annualized 2% in the first quarter, Germany’s Consumer Price Index increased 6.8% in June versus the previous year, and The China Caixin global services purchasing managers’ index (PMI) reporting activity expansion.
Thus, strong economic indicators have heightened investors’ expectations of further tightening measures from the U.S. Federal Reserve.
Fed Chair Jerome Powell’s suggestion of two more interest rate hikes in 2023, coupled with the increasing cost of capital and higher returns on fixed-income investments, have diminished interest in cryptocurrencies.
On the regulatory front, the most pressing news and events included:
TVL nears 3-year lows as network demand falls
The Ethereum network is likely facing its own challenges, particularly after co-founder Vitalik Buterin stated on June 29 that he does not stake all of his Ether due to the complexities associated with multisignature wallets.
The total value locked (TVL), which measures the deposits locked in Ethereum’s smart contracts, reached its lowest level since August 2020. The indicator declined by 3.1% to 13.7 million ETH in the 30 days leading to July 4, according to DefiLlama.
A lower TVL means either investors are losing interest in the network’s smart contract use or have moved to layer-2 alternatives in search of lower transaction fees. Either way, the potential demand for the Ethereum network is negatively impacted, thus being interpreted as bearish.
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…
Click Here to Read the Full Original Article at Cointelegraph.com News…