The bearish Ethereum fractal is combined with lower network activity as Ethereum price struggles to break above $2,000.

The price of Ethereum’s native token, Ether (ETH), has risen about 35% so far in 2023. But its attempts to break through the psychological resistance level of $2,000 have been met with strong bearish rejections on multiple occasions.

Let’s take a closer look at three possible reasons why the Ethereum price has failed to decisively reclaim $2,000 since May 2022.

Ethereum Price Draws Bear Cycle Fractal

Ethereum’s inability to break above $2,000 in 2023 would resemble the bearish rejection around $425 in 2018-2019.

In both cases, Ether appears to be in a recovery phase while keeping an eye on the Fibonacci retracement chart above the 0.236 Fib line.

In 2018-2019, the 0.236 Fib line near $425 helped limit Ethereum’s recovery attempts. By 2023, this line will approach $2,000 and become a selling zone again, thus depressing the price of ETH.

Dollar, Bitcoin strengthen

A stronger U.S. dollar has dampened demand for Ethereum in recent months, reducing its ability to close decisively above $2,000.

The prevailing negative correlation between the top cryptocurrencies and the U.S. dollar is to blame. In particular, in 2023, the weekly correlation coefficient between Ethereum and the U.S. Dollar Index (DXY) has been negative, as shown below.

Meanwhile, Ethereum has largely underperformed Bitcoin in 2023, thanks to the ongoing hype surrounding spot Bitcoin ETFs. For example, the widely-tracked ETH/BTC pair is down 20% year to date (YTD).

Furthermore, according to CoinShares’ weekly report, Ethereum-related investment funds have seen net capital holdings fall by $114 million so far in 2023. In contrast, Bitcoin-based funds have attracted $168 million over the same period.

Ethereum network activity drops

The total value locked (TVL) across the Ethereum ecosystem has fallen from 18.41 million ETH to 12.79 million ETH as of 2023. As JPMorgan analysts also recently warned, this highlights the reduction in capital availability, resulting in lower returns for investors.

The decline in TVL was accompanied by a drop in gas fees on the Ethereum network, which reached a yearly low on October 5.

According to Dapp Radar, Ethereum’s NFT volume and unique active wallets have also fallen by 30% and 16.5% over the past 30 days.

These include declines in key metrics for popular applications, including decentralized exchange Uniswap V2, DEX aggregator 1inch Network, Ethereum staking provider Lido, and more.

Ethereum Technical Analysis

Meanwhile, Ethereum price technicals suggest that it could rebound to the 50-day exponential moving average (50-EMA; red wave) near $1,665.

However, from a broad perspective, ETH has been trapped in a bearish continuation pattern known as an ascending triangle.

Therefore, a break below the lower trendline of the triangle could lead to a price crash to the maximum height of the pattern. In this case, the price of ETH could drop to $1,465 and $1,560 in October 2023, depending on the breakdown point.

In the short term, a breakout above the 50-day moving average could see ETH’s price rise to the upper trendline of the triangle near $1,730 in October 2023, in line with the 200-day moving average (blue wave).