Ethereum, which plummeted 61.5% from its peak, can it really break the $2,000 barrier?

▲ Ethereum (ETH)/AI Generated Image ©

Amidst a tense standoff between powerful bearish and bullish factors, Ethereum (ETH) is precariously holding the $1,900 level and seeking a rebound based on a major upgrade and inflows into spot ETFs.

According to investment specialized media TradingNews on August 7 (local time), Ethereum is forming a support line at the $1,900 level, a 61.5% drop from its peak. Despite increased expectations for the Federal Reserve's interest rate cut due to weakening US employment figures, the upward momentum has been limited. However, capital inflows into spot ETFs and 33% of staked ETH supply are tightening market circulation, firmly supporting the price floor.

On the charts, Ethereum has maintained an upward trend, consistently raising its lows since the $1,520 bottom in June. The Relative Strength Index (RSI) is also around 54, reflecting stable buying interest without being in an overbought zone. However, further upward movement is being delayed by strong resistance formed between $1,980 and $2,030. Experts have set the $1,849 level, where key moving averages are located, as a critical support line, anticipating that if this level holds, attempts to reclaim $2,000 will continue.

The core drivers of this rebound attempt are Ethereum spot ETFs and the staking mechanism. Although the overall scale is smaller compared to Bitcoin spot ETFs, they have recorded higher net inflows than Bitcoin products for three consecutive weeks recently, leading to a reversal in institutional capital flows. In particular, ETF products linked to staking functionality offer an actual annual return of around 2% and directly lock up circulating supply in the market, making them a structural positive factor that could lead to long-term supply shortages.

Technically, the Glamsterdam upgrade, scheduled for late August, is considered the biggest variable. This upgrade is expected to expand the gas limit from 60 million to 200 million, significantly reducing transaction fees by approximately 78.6% and greatly improving network processing speed. However, lower fees could reduce the amount of ETH burned, weakening the supply burning effect in the short term. The possibility of short-term profit-taking sales immediately after past major hard forks should also be considered.

Ultimately, Ethereum's direction hinges on the results of the US Consumer Price Index (CPI) to be announced on August 12 and the successful implementation of the Glamsterdam upgrade. The current sideways trading around $1,900 represents a clear risk-to-reward ratio, and a decisive breakthrough of the key resistance level at $2,000, accompanied by significant trading volume, is expected to signal a strong trend reversal.

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