Ether’s price has struggled to break above $3,900, despite venturing above this level on multiple occasions in the past seven days. The market had anticipated a boost from the approval of the spot Ethereum exchange-traded fund (ETF) by the United States Securities and Exchange Commission (SEC), but the rally has stalled.
Analysts suggest that the failure to break the $3,900 resistance comes from the rally that preceded the spot ETF approval, as well as the fact that some investors are disappointed that effective trading will take longer. This has created uncertainty and negative price impact.
The open interest in Ether futures has risen to its highest level ever, posing liquidation risks. A higher notional in play means the risk of liquidations grows exponentially, with longs (buyers) and shorts (sellers) being matched at all times. This could lead to a sudden drop in price if longs are using excessive leverage.
Competing blockchains, such as BNB Chain, Solana, and Aptos, have outpaced Ethereum’s activity growth, with some users and projects opting for these alternatives. Ethereum’s high gas fees may be seen as a sign of success, but they also offer an opportunity for competing blockchains that focus on high scalability.
Ethereum’s daily active addresses engaging with decentralized applications (DApps) have declined by 2% compared to the previous day, and the total volume transacted on the Ethereum network has increased by a meager 2% during the same period. This data shows that despite Ethereum’s strong fundamentals, multiple DApp use cases, and diverse investor profiles, there is a tendency to adopt alternative blockchains.
For Ether to break above $3,900, it will need to overcome these challenges and demonstrate a clear path to growth and adoption. Until then, the price is likely to remain range-bound.
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Source: Cointelegraph
