• Ethereum (ETH) has been unable to break the $2000 resistance level despite a bullish month for the Nasdaq 100.
• Mike McGlone, Senior Macro Strategist for Bloomberg Intelligence believes Ethereum needs certain conditions to rise above this key level.
• Historically, there is a strong correlation between cryptocurrencies and high-beta tech stocks, meaning that Ethereum may need the stock index to lift it past $2000.
Ethereum Trapped Under $2000
Ethereum (ETH) appears trapped under $2000 after a stock rally has failed to push it past the price point, according to Mike McGlone, Senior Macro Strategist for Bloomberg Intelligence. The cryptocurrency has failed to sustain itself above this price point over the last 12 months despite a bullish month for the Nasdaq 100 stock index in Q2 of 2021.
Correlation Between Crypto and Stocks
Historically, there has been a strong correlation between cryptocurrencies and high-beta tech stocks – especially in June 2022 when both asset classes cratered under macroeconomic pressure. This means that ETH may depend on the stock index in order to lift all boats and break through its major resistance of $2000.
From an investor’s perspective, altcoins have often been compared to tech securities; Bill Miller, a famous investor recently commented that Ethereum was “the Amazon or Microsoft of crypto” due to its ability for growth potential and resilience against market downturns.
The Need For Regulation
However, McGlone also believes that regulation is necessary if Ethereum wants to sustainably grow past its current resistance levels. He commented: “It seems clear that some kind of regulatory clarity would help spur more mainstream adoption by institutions—a key ingredient for sustainable higher prices.“ This echoes other investors sentiment regarding regulation as an enabler of greater adoption by institutional players such as banks or hedge funds.
Ultimately, it appears that Ethereum needs two main components in order to break through its major resistance point: namely strong correlation with tech stocks and regulatory clarity from governments worldwide in order to attract more institutional players into the space.