Here’s what the analyst believes Ethereum needs to break the 12-month-long resistance level.
Identifying Ethereum’s Key Resistance Level
McGlone tweeted on Thursday that despite the NASDAQ 100 stock index reaching a 52-week high in Q2, Ethereum (ETH) appears to be facing a “resistance ceiling” at the $2,000 price level, as it has been unable to maintain its position above it.
In the past, cryptocurrencies and high-beta tech stocks have tended to be closely correlated. This was particularly evident in June 2022 when both asset classes experienced a significant drop due to macroeconomic pressures, resulting in ETH losing its $2,000 level.
McGlone noted that the stock index may have a significant impact on the value of the token.
From an investor’s perspective, Ethereum and altcoins have often been compared to tech securities due to their strong correlation. For example, Bill Miller, a renowned investor who has consistently outperformed the stock market for over a decade, has referred to altcoins as “venture assets.” In contrast, Bitcoin has been likened to “digital gold” by Miller and others like Paul Tudor Jones. They view it as a safe haven asset, an inflation hedge, and a way to protect against bank failures.
In recent months, Bitcoin’s correlation with gold has increased as both assets surged following several bank collapses in March. Meanwhile, its correlation with stocks has declined. This could help explain why a rally in tech stocks has not resulted in a surge in ETH and other assets, as Bitcoin’s influence over their prices is significant.
Impact of Regulatory on the Industry
This week, the U.S. Securities and Exchange Commission (SEC) filed lawsuits against two of the world’s largest crypto exchanges, Binance and Coinbase, resulting in price pressure on the crypto market.
Bitcoin and Ethereum have both experienced a 1.5% decline this week, while Solana (SOL) and Cardano (ADA) have seen a more significant drop of 10% and 12%, respectively. The SEC’s Coinbase lawsuit specifically mentioned SOL and ADA as securities, leading to a price drop similar to XRP’s decline in 2020.
Although Ethereum was not classified as a security, the SEC has insinuated on several occasions that it may meet the criteria for classification.