Key Insights:
- Analysts are pointing out the $2,000 zone as the most important support level to watch for Ethereum.
- According to a recent interview, Canary Capital’s CEO doubts ETH’s long-term rally and instead favours Bitcoin.
- Market data shows that ETH short sellers are struggling amid bullish strength.
Ethereum (ETH) is once again at the centre of market debate, and analysts are pointing to the $2,000 zone as one of the major support levels to watch.
In particular, analyst @ThinkingUSD shared on August 18 that ETH could retrace back toward $2,000 soon.
Why $2,000 Matters for ETH Traders
Ethereum has held $2,000 as a strong support zone, especially in the current cycle and the previous one.
During the 2023 correction, ETH bounced at this level before regaining its strength. Because of this, traders now view it as the most important downside area for risk management.
The $2,000 mark is more than just a round number. This price level carries weight both on technical and psychological levels.
According to Ethereum’s price history, ETH buyers tend to defend this price level, which makes it a natural battleground between bulls and bears.
Technical traders continue to point out indicators like the Relative Strength Index as reasons for Ethereum’s price action.
In particular, if ETH approaches overbought levels, it could support the case for a pullback.
On the other hand, a spike in trading volumes on ETH/USDT and ETH/BTC pairs tends to add volatility into the equation.
This said, many traders would see a drop towards $2,000 as an opportunity. Long-term holders may see it as a favourable entry, while leveraged traders are strongly at risk of liquidation if a breakdown occurs.
Bitcoin Strength Overshadows Ethereum
Ethereum’s mixed outlook comes as Bitcoin continues to dominate institutional attention despite losing the battle to Ethereum over the last week.
According to Steven McClurg, the CEO of Canary Capital, in a recent CNBC interview, Bitcoin could reach between $140,000 and $150,000 by the end of the year.
He says that ETF demand and large institutional flows are the main drivers of this price movement.
“I’m not a big fan of Ethereum, only because it is an older technology,” McClurg said. He argued that faster and cheaper protocols have overtaken ETH.
McClurg is not alone in doubting Ethereum’s strength. Some critics continue to call the asset’s recent rally “short-lived”.
The point towards the competition from networks like Solana and Sui, which offer lower fees and higher throughput.
Still, Ethereum is holding on to its strength according to Greg Magadini, Director of Derivatives at Amberdata, who pushed back against the “old tech” label.
He compared Ethereum’s dominance to Apple’s ecosystem and said that developer loyalty and network effects are one of the aspects that give ETH lasting strength.
Magadini believes ETH could gain against Bitcoin, and even predicts that ETH/BTC will soon reach 7%. This means that ETH could trade between $8,000 and $10,000 if BTC hits McClurg’s targets.
ETH Short Sellers Struggle
While some analysts expect a retreat, many traders are piling shorts against Ethereum.
According to an 18 August post from crypto commentator Quinten Francois, Ethereum shorts have hit a new all-time high. This means that more and more investors are betting against Ethereum at the time of writing.
These positions, though many, aren’t performing well.
Another post from crypto analyst @rovercrc on 17, the top 10 ETH short positions are deep in the red.
@rovercrc warned traders against shorting a bull market and noted that the market’s strength continues to punish aggressive shorts.
This shows the general theme in crypto markets, where timing makes all the difference. Bearish calls may work well with technical indicators. However, momentum can override some short-term signals.
For now, ETH appears to be hanging in the balance between clear bullish strength and warnings of a pullback.
