With respite from regulators, the crypto news cycle’s attention has shifted to price. Except for a foray to $27,629 this past Monday, bitcoin price has dawdled in the $28,000 range for most of last week. Analysts say a key resistance level for the cryptocurrency is $30,000.

A Difficult Transition

But current conditions are difficult for the cryptocurrency to make that move. Away from crypto’s confines, the recent banking crisis’s embers continue to smolder and affect prices. In his letter yesterday, JP Morgan CEO Jamie Dimon stated the crisis was not over and could have “repercussions for years to come.”Crypto was a direct participant and precipitator of the crisis through Silvergate and Signature – two banks that serviced crypto clients – in the eye of the crisis.

Morgan Stanley’s Mike Wilson put out another dampener in a note yesterday stating that equity markets are at greater risk of pricing in much lower estimates of hard data changes.

Why are these pronouncements important?

Because equities are risk assets that thrive, as crypto markets did, during good times of low interest rates and economic cheer. The doom and gloom of the current economic climate has driven investors to the safety of bonds.

Research firm Vanda has found that purchases of equities by individual investors – the same ones who pumped bitcoin prices to record highs in the past – has slowed sharply in recent weeks. The American Association of Individual Investors advertised similar findings from its sentiment survey. According to the organization, the percentage of investors who are bearish on the current market has risen to its highest level since December 2022.

Near Yet Far

Bitcoin’s current stalled rally is the product of fewer players and low liquidity in its ecosystem, and a supply slow down to match declined demand. The current situation, conducive as it is to price jumps, will not last long. An oncoming downdraft in the form of a possible recession can exacerbate the pinched conditions in bitcoin’s ecosystem, even if the Fed moderates or pauses its interest rate hikes, and make it difficult to squeeze further price rallies.

The bitcoin price resistance level craved by its enthusiasts may be near yet so far.

The Merge Rally in Ether Prices

While bitcoin price continues to linger, ether prices are jumping.

Ethereum’s native token has recorded a price increase of more than 7% in the last week and 22% in the last month. Investors are pouring money into it in anticipation of the final stage of Ethereum’s move to a Proof of Stake consensus system. Withdrawals of staked ether are the key priority of the event, which will occur on April 12.

Developers at the Ethereum Foundation have said that investors can begin withdrawing their staked ether and collect rewards that have been accumulating on the token since December 2020, after that date. A sale of the released token in crypto markets could net further profits, depending on their staking timelines.

Misplaced Enthusiasm

While The Merge is being touted as a reason for ether’s price increases, there is little proof of investor enthusiasm on the ground. A recent blog post from research firm Kaiko shows that ether is suffering from the same illiquidity malaise that has afflicted bitcoin. In fact, ether markets hit their lowest point in the middle of last month. Since the FTX collapse last November, liquidity in ether markets has declined by 41.67%, according to data from the firm.

Again, this means that ether prices are propped up by fewer actors than before, making them susceptible to volatility and manipulation.  But that is par for the course in crypto, especially for tokens that lack inherent utility or use cases in the real world.

Ether’s case is made worse by the dubious players and contradictions in its staking program. These players offer rewards disconnected from those on Ethereum itself, converting staking itself into an obvious regulatory bait.

Given the Securities and Exchange Commission’s (SEC) recent history of striking at opportune moments, the agency may be waiting for just the right moment to swoop down on the token and classify it as a security.