According to Mike McGlone, senior macro strategist at Bloomberg Intelligence, Ethereum (ETH) is currently struggling to break through the $2,000 price point following the stock market rally.
McGlone thinks this is where Ethereum needs to break to break through a 12-month resistance level.
ETHEREUM STRONG RESISTANCE LEVEL
In a tweet on Thursday, Mike McGlone noted that the $2,000 price of Ethereum (ETH) acted as a “hard resistance” as ETH failed to sustain above it, while the NASDAQ stock index 100 hit a 52-week high in Q2.
In the past, cryptocurrencies and tech stocks have had a strong correlation. This was especially true in June 2022 when both assets were under macroeconomic pressure and ETH dropped below $2,000.
McGlone also emphasized that “tokens can depend on a stock index to lift all the boats”.
In addition to this particular correlation, investors often compare Ethereum and altcoins to technology securities from an investor’s perspective.
The correlation between Bitcoin and gold has increased in recent months after both assets rallied in the wake of multiple bank crashes in March, while Bitcoin’s correlation with equities has declined. Given Bitcoin’s influence on the value of Ethereum and other assets, this could help explain why the rally in tech stocks didn’t simultaneously push Ethereum’s price up with it.
SPECIAL PRESSURE
This week, the cryptocurrency has come under downward pressure after the two largest cryptocurrency exchanges in the world, Binance and Coinbase, were brought by the United States Securities and Exchange Commission (SEC).
Both Bitcoin and Ethereum are down 1.5% for the week, while other coins like Solana (SOL) and Cardano (ADA) are down 10% and 12% respectively. Solana and Cardano are reportedly being considered securities in the SEC’s lawsuit against Coinbase, resulting in a price drop similar to XRP that occurred in 2020.
Although Ethereum is not considered a security, the SEC has in turn implied that it may fall within the definition of a security.
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