The cryptocurrency market has enjoyed a significant rise in value since its inception. Indeed, it has gained popularity across the far reaches of the globe. One of the reasons for this is the volatility of these digital currencies. This characteristic measures the change in their value over a specific period. These price fluctuations could either be positive or negative.
The cryptocurrency market has experienced a crash in recent times. In January 2022, the crypto market’s value dropped below the $2 trillion mark. This raised major concerns among investors. After all, the same crypto market was worth more than $3 trillion in November 2021 – a couple of months back. The latest crypto crash is believed to be a result of volatile market conditions.
As a result, most cryptocurrencies have suffered as their values keep dropping, including major cryptocurrencies like Bitcoin and Ethereum. In November 2021, Ethereum reached an all-time high value of $4,891.70. However, as of the time of writing, the ethusd price is $1,594.03, representing a significant drop in its value during the recent major cryptocurrency crash.
Crypto Market Condition
The crypto market crash occurred as a result of the aggressive approach of the Federal Reserve towards increasing the interest rates as the crypto industry kept on facing several regulatory challenges. According to experts, it is also believed that the heightened volatility is only natural when there is a persistent surge in inflation, war, and changing monetary policies.
Despite these, Ethereum has experienced a spike in its value over the past couple of weeks. This happened after the network’s developers declared a tentative date for a significant update, which is now fixed for September 19. This upgrade is referred to as the merge among developers and investors. It will change the way Ethereum transactions are ordered, allowing for more sustainable and effective use.
Furthermore, it must be stressed that the increase in value that Ethereum has experienced in recent times is due to technological advancements. It is reasonable for investors to be drawn to a cryptocurrency that is robust and more than just a coin. Ethereum is more like a platform token than a coin.
Will the price rally continue to retrace to its positive trend?
The fact is that no prediction can perfectly guarantee the direction of Ethereum’s price swing, thanks to various external factors. For instance, when there is high inflation, the government tends to raise the interest rate to reduce the spending rate of investors. This translates to a lower appetite for high-risk investments, including cryptocurrencies.
The current global inflation has ensured that investors are wary of investing in Ethereum, as well as other cryptocurrencies. This has reduced the demands for these digital currencies, and when that happens, it is only natural for the prices to reduce.
However, an important factor has ensured that investors are excited about the potential of Ethereum: Technological advancement. This has enabled Ethereum to experience a recent spike in value. Since Ethereum is switching to a less energy-intensive version, its price volatility can become even higher than Bitcoin. These upgrades will make it more appealing for use.
According to Coinpedia, a crypto news outlet, it has been predicted that Ethereum could reach between $6,500 and $7,500 by the end of 2022, as long as the bullish rise that occurred in the middle of 2021 starts again. The same news outlet predicted that the value can even get as high as $12,000 if the switch to the new Ethereum 2.0 version is successful. This is totally possible. After all, these digital currencies are susceptible to wild price swings in a very short period.
Conclusion
Almost everyone across the far reaches of the globe has heard about cryptocurrency, even though many might not fully understand its concept. This made it possible for cryptocurrencies, including Ethereum, to enjoy widespread recognition.
Yet, over the past few months, the high inflation rate, the ongoing war, and high interest rate have facilitated the reduction in Ethereum’s price. While it is impossible to accurately predict the direction – or the actual price – of Ethereum’s price by the end of 2022, all signs, including new technological advancements, show that the positive swing in price will only continue.
