Ethereum Faces Bearish Battle and May Not See $2K Anytime Soon

Summary: Ethereum faces resistance at $1,920 due to macroeconomic challenges, regulatory concerns, and declining DApps usage. Weaker demand and lower gas fees impact Ethereum network usage and total value locked (TVL) in smart contracts. Derivatives metrics indicate a bearish sentiment, making it challenging for ETH bulls to break the $1,920 resistance level.

Challenges from Macroeconomic Conditions and DApps Usage

The price of Ethereum faces significant resistance at $1,920, influenced by various factors. These include a federal judge's decision against Binance, worsening macroeconomic conditions highlighted in HSBC Asset Management's report, and statements from the International Monetary Fund suggesting an economic downturn. Furthermore, declining usage of decentralized applications (DApps) on the Ethereum network, reflected in reduced gas fees and a decrease in DApp active addresses, adds to the bearish sentiment.

Declining Ethereum Network Demand and TVL

The usage of DApps on the Ethereum network fails to gain momentum as gas fees drop by 60%. Notably, the seven-day average transaction cost decreases significantly, while DApp active addresses also decline. Additionally, the total value locked (TVL) in Ethereum smart contracts reaches its lowest level since August 2020, demonstrating a 6.9% decline between April and June, according to DefiLlama.

Derivatives Metrics Reflect Bearish Sentiment

ETH futures premiums, typically trading at a slight premium to spot markets, fail to exhibit healthy market conditions. The futures premium remains below the neutral 5% threshold, suggesting a lack of bullish sentiment among professional traders. Furthermore, the ETH options market displays a balanced demand for options, with the 25% delta skew indicator indicating a neutral outlook.

Formidable Resistance and Bearish Outlook

Considering the combination of weak derivatives metrics, declining TVL, and DApps usage, bears have a better position to defend the $1,920 resistance level. The worsening macroeconomic conditions and regulatory news further contribute to the moderate pessimism surrounding Ethereum. While a retest of $1,750 is not inevitable, breaking the $1,920 level proves challenging for ETH bulls in the short term.

In Conclusion, Ethereum encounters strong resistance at $1,920 due to a range of factors, including macroeconomic challenges, regulatory concerns, and declining DApps usage. Weaker demand on the Ethereum network, coupled with a drop in TVL, reinforces the bearish sentiment. Derivatives metrics and options market indicators suggest a lack of bullish sentiment, making it difficult for ETH bulls to surpass the $1,920 resistance level. Overall, the short-term outlook for Ethereum leans towards bearishness.