Ethereum (ETH) appears trapped under $2000 after a stock rally has failed to push it past the price point, according to Mike McGlone, Senior Macro Strategist for Bloomberg Intelligence.
Here’s what the analyst believes Ethereum needs to break the 12-month-long resistance level.
Ethereum’s Major Resistance
In a tweet on Thursday, McGlone said that $2000 looks like a “resistance ceiling” given that ETH has failed to sustain itself above that, despite the NASDAQ 100 stock index tapping a 52-week high in Q2.
Historically, the correlation between cryptocurrencies and high-beta tech stocks has been strong. This was especially true in June 2022 when both asset classes cratered under macroeconomic pressure, and ETH lost its $2000 level.
Divergent Weakness and #Ethereum's $2,000 Ceiling –
The inability of Ethereum to stay above $2,000 despite a 52-week high in the #Nasdaq 100 Stock Index in 2Q may portend a resistance ceiling for the crypto. The token may depend on the stock index to lift all boats. pic.twitter.com/Q5dBSo4fTo
— Mike McGlone (@mikemcglone11) June 8, 2023
“The token may depend on the stock index to lift all boats,” added McGlone.
Besides their concrete correlation, investors have often compared Ethereum and altcoins to tech securities from an investor’s point of view.
Bill Miller, for instance – a famous investor known for outperforming the stock market for over a decade – said last year that investors should view altcoins as “venture assets.” Alternatively, he and others including Paul Tudor Jones have likened Bitcoin to “digital gold” as a safe haven asset, inflation-hedge, and form of resistance to bank failures.
Bitcoin’s correlation to gold has risen in recent months after both assets surged in the aftermath of numerous bank collapses in March, while its correlation to stocks has declined. Given Bitcoin’s influence over the price of ETH and other assets, this could help explain why a tech stock rally has not led ETH to surge alongside it.
Crypto has also suffered price pressure this week after two of the world’s largest crypto exchanges – Binance and Coinbase – were targeted with lawsuits by the U.S. Securities and Exchange Commission (SEC).
Both Bitcoin and Ethereum have fallen 1.5% on the week, while other coins like Solana (SOL) and Cardano (ADA) have fallen 10% and 12% respectively. The latter two coins were explicitly named as securities in the SEC’s Coinbase lawsuit, suffering a price fall similar to XRP in 2020 as a result.
While Ethereum wasn’t among the crypto assets to be classified as securities, the SEC has implied numerous times that it could fit the bill.