Following several weeks of decline, things finally seem to be looking up for crypto, with a new bullish trend beginning to take shape on the horizon. Although the upward tendency appears to be lifting all boats, sending a wave of optimism among investors, not all coins have benefited as much from the recent market increase.
At one end of the spectrum, we have Bitcoin, which continues to advance towards the upper end of the $60K price range. At the other end, we have eth prediction whose appreciation journey isn’t going as smoothly, considering that the ETH coin price fails to hold above the $3K resistance level.
Crypto’s Bullish Break
The month of March was quite thrilling for crypto, with Bitcoin surpassing its former all-time high weeks before its fourth halving and various other crypto assets registering notable gains. However, after the rally, things got awfully quiet in the crypto realm for a while, up until recently.
Figures for May 15 reveal an increase of 5.5% in the global crypto market cap, which is now estimated at $2.51 trillion. While there are numerous factors at play whenever the market goes through bullish or bearish phases, this recent rise was most likely driven by the publishing of the report on inflation and retail sales rates in the US.
Market leader Bitcoin benefited greatly from the surge, going from $61K to over $66K in a matter of hours and maintaining momentum. The same cannot be said about Ethereum, whose appreciation was far less spectacular. The altcoins only managed to briefly jump above the $3K threshold from $2,8K before falling back to $2,9K. Moreover, the year-to-date data shows Ethereum has fallen behind Bitcoin by almost 22% in 2024.
The discrepancy is not exactly surprising, given that Bitcoin has always kept a considerable distance from Ethereum. However, the fact that the gap between the two main coins is getting bigger, with Ethereum struggling to maintain above $3K, is giving rise to numerous questions. What is keeping Ethereum from advancing? Will the altcoin be able to make up for the lost ground and catch up with the rest of the market? What’s the price outlook for Ethereum for the rest of the year?
While it may be difficult to provide a clear answer to these issues at the moment, we might be able to gain a clearer understanding of what’s happening by taking a closer look at some key developments.
The Broader Economic Landscape
One should not forget that despite their decentralization and their borderless nature, digital currencies are not an isolated asset class immune to what’s happening in other financial markets. On the contrary, it’s been noted that crypto, just like all other assets, is heavily impacted by macroeconomic factors.
The current macroeconomic landscape seems to favor crypto to some extent. The market had a positive reaction to the release of the U.S. Consumer Price Index (CPI), which revealed a 3.4% year-over-year rise in April, marking a slowdown in inflation, as per market expectations.
However, with the economy in a vulnerable state and the likelihood of a recession not yet out of the picture, there’s still the question of what the U.S. Federal Reserve (Fed) might do to keep risks in check. It’s possible that the Fed might choose to keep interest rates high to combat inflation. In this case, the central bank may adopt measures to increase the amount of money in circulation. This means that regardless of the Fed’s strategy regarding interest rates, inflation might still surge, and a higher inflation rate could see more money being poured into crypto investments.
While there is no guarantee that these predictions will come true, the current trends indicate this as the most likely scenario. As a result, the crypto rally could extend further and drive the prices of digital assets upwards. So, even if Ethereum didn’t capitalize on the initial rise, there are still chances for it to recover the lost ground soon.
The Outlook For Spot Ether ETFs
Ethereum’s evolution is closely linked to the U.S. Securities and Exchange Commission (SEC) decision on spot Ethereum ETFs, which is scheduled for May 23. When the first spot Bitcoin exchange-traded funds were given the green light back in January, the excitement prompted by the approval caused the Bitcoin price to spike. Now, Ethereum supporters hope and expect that something similar will happen for ETH.
Unfortunately, the enthusiasm surrounding the potential approval of spot Ether ETFs seems to decline as we move closer to the date of the decision, as most analysts and investors aren’t too optimistic about VanEck’s spot Ethereum ETF application receiving a positive response from the SEC. The regulator is known for its reluctance regarding spot crypto ETFs and digital assets in general, as demonstrated by their repeated rejections of spot BTC ETF proposals until they finally gave them the green light. It would be rather unrealistic, if not downright naïve, to think that Ether ETFs will have a smoother journey to launch.
For this very reason, many traders are still on the fence, hesitating to make any investment decisions until the SEC’s decision is revealed. This makes perfect sense considering that a negative outcome could cause a considerable drop in Ether’s price, which might mess up investors’ plans. Therefore, the current state of uncertainty might hinder Ethereum’s attempts at breaking above $3K.
Another factor that could play a part in this ongoing resistance is Ethereum’s recent transition from a deflationary to an inflationary status following the Dencun upgrade and the subsequent reduction in gas fees.
Although the crypto market is in a much better place currently, judging by its trajectory over the past few months, the obstacles for Ethereum are not yet over. The altcoin still has several hurdles to overcome to push beyond the resistance level and keep up pace with Bitcoin’s bullishness.
