Ethereum didn't begin 2022 on an impressive note. To make matters worse, on the fifth day of the year, Ethereum's price fell below its resistance level of US$3,500, signaling an approaching slump in the cryptocurrency market. This happens at a time when Bitcoin, ETHER's direct competitor is also facing major hits since last October. But is it the calm before the storm? Where is Ethereum headed in 2022? We explore.
Following Bitcoin's success, Ethereum emerged as the second-most-important cryptocurrency in the digital token sphere. Owing to its amazing applications and features, ETHER gained a market capitalization of US$412 billion. Although ETHER has positioned itself on a strong spot, the so-called 'Ethereum Killers' like Solana, Cardano, and Avalanche are trying their best to take over its position. Besides, these competing cryptocurrencies are trying to improve on Ethereum's biggest flaws. If ETHER loses its user base and developer lead in 2022, the cryptocurrency's price will fall drastically. Fortunately, such scenarios are not on the radar for now. Investors are trying new methods like burning to keep Ethereum's price afloat.
ETHER has also come a long way from where it started in 2021. At the beginning of last year, an Ethereum token was valued at US$1,000. Towards the end, ETHER recorded better growth than its competitor Bitcoin. Therefore, experts say that this downwards trend could be a brief distraction, and eventually, ETHER will kickstart its previous play before the end of January.
A plethora of reasons and real-time market concepts are contributing to Etheruem's fall. Some of them are listed as follows.
The Uniqueness is Becoming Common: While Bitcoin is considered a major investment model, people opt for Ethereum solely for its amazing advancements in smart contracts, decentralized applications, NFTs, etc. These are some of the unique features that made Ethereum's platform stand out from others. But as technological advancements are approaching other cryptocurrencies, especially the 'Ethereum Killers', the solidarity of ETHER is collapsing. Besides, the high gas fees in the Ethereum network is pushing small investors to choose other platforms. Already, innovative projects have moved to Solana. NFT enthusiasts are also choosing other cryptos like Cardano and Polkadot, which are building advanced ecosystems for the disruptive art model.
Ethereum is Bearing the Cryptocurrency Market's Pressure: It is not just Etheruem that is facing a slump in the last two months. Therefore, experts say that Ethereum could be bearing the massive selling pressure felt elsewhere in the cryptocurrency market in recent weeks. Bitcoin, the major cryptocurrency in the market, is also recording severe price hits in recent months. After reaching a record US$68,500 in October 2021, BTC's price is nearing its long-stood resistance of US$50,000. Therefore, once the cryptocurrency market reaches a healing phase, Ethereum's price will also reach its previous high.
Slip in Following the Timeframe: To address the high-cost and transaction challenges, Ethereum planned to upgrade its network to proof-of-stake. However, Ethereum 2.0 was supposed to be completely rolled out at the beginning of 2022. But the upgrade has been delayed for a couple of months. This is also having an impact on Etheruem's price.
According to predictions, Ethereum 's inability to surpass US$4,000 resistance since the beginning of 2022 indicates a bearish trend. Forget the US$4k mark, ETHER might have a hard time surpassing US$3,800 as the bears are mounting a stiff challenge there.
Therefore, if the price continues the downward rally, then the nears will again try to pull the Ethereum price below the support zone. If they manage to do that, the price will hit as low as US$3,000 before making a comeback.
Fortunately, the Ethereum network is trying disruptive ways like burning digital token to gain value. Since Ethereum 2.0 upgrade was rolled out, over US$2.54 billion worth of ETHER has been burned. This is believed to help the cryptocurrency gain value in 2022.
Join our WhatsApp Channel to get the latest news, exclusives and videos on WhatsApp
_____________
Disclaimer: Analytics Insight does not provide financial advice or guidance. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments. Read more here.