Ethereum’s price falls nearly 10% as it struggles to sustain above $1,000 amid market volatility. Here’s what that means for investors
Ethereum’s price fell 10% to nearly $1,000 on Thursday, nearly two weeks after falling below $900, its lowest level since January 2021.
Ether’s price, along with bitcoin, has been extremely volatile over the past few weeks due to a broader market pullback from risky assets. The stock markets fell sharply after a main inflation report Estimates missed and the Federal Reserve hiked interest rates by 0.75% and crypto markets followed suit.
Ethereum has also underperformed Bitcoin so far in 2022, which experts say could be due to building anticipation as the network transitions from proof-of-work to proof-of-stake. Bitcoin is down about 55% year-to-date, while Ether is down more than 70%, according to NextAdvisor data.
Ethereum recently completed a test merge on its Roppsten network, which is a critical step in completing the massive software upgrade later this summer. Investors and developers are demanding an upgrade “the merging”, and it will change the way transactions are ordered on Ethereum, making it more efficient and sustainable for widespread use. But until then, experts are waiting to see how investors and companies building their technology on Ethereum’s platform react to the changes.
“The major proof-of-stake (POS) transition for Ethereum is a game changer that could hurt miners who have funded a lot of hardware,” says Edward Moya, senior market analyst at OANDA.
Experts say the crypto market is reflecting heightened volatility that comes with war, persistently rising inflation, and shifting U.S. monetary policy. Experts are also pointing to other factors such as the crypto market chasing the stock market, greater mainstream adoption and falling prices over the past few months contributing to what we are currently seeing in crypto prices.
Government officials have also continued to show interest in more crypto regulation and even the possibility of creating a government-issued digital currency. Bitcoin’s price has been similarly rough lately.
All of this has made for a shaky start to the year for Ethereum. Ethereum’s price has ranged between $1,000 and $1,200 so far this week. Here’s how Ethereum’s current price compares to its daily high over the past few months:
|A week ago (June 23)||A month ago (May 30)||3 months ago (March 30)|
After surpassing $4,100 on December 27th, Ethereum has ranged between $2,100 and $4,000 in the days since. Despite the slow start to 2022, many experts are still optimistic and predict that Ethereum’s price could potentially reach and surpass $12,000 this year.
Despite the recent plunge, Ethereum still had a relatively strong end to 2021. Ethereum set a new all-time high when it surged above $4,850 on November 10th, and it carried that strength into December before ending the month month fell behind. Despite the late dip, Ethereum ended the year well above where it started: In January 2021, Ethereum was priced just above $1,000.
Like Ethereum, Bitcoin has stalled over the past month after its own strong November; Bitcoin hit a new all-time high on November 10 when it surged above $68,000. The future of cryptocurrency is sure to see much more volatility in the price of Bitcoin and Ethereum, and expert advice to investors remains the same.
What should Ethereum investors do?
As with any long-term investment, experts advise ignoring the ups and downs. The recent peak price does not mean that Ethereum’s volatility has disappeared.
“The real question is will ownership of these coins continue to experience compound, exponential growth? Nothing in cryptocurrency fundamentals tells me the answer is yes,” says Jeremy Schnieder, the investment expert behind it Personal Finance Club.
Since there is no guarantee that a cryptocurrency will increase in value, experts advise never investing more than 5% of your portfolio in cryptocurrency. Never invest at the risk of not meeting other financial goals, like paying off high-interest debt or saving for retirement.
If you’ve met all of these benchmarks, it’s best to ignore the hype about new record highs or lows. As with traditional, long-term investing, the best thing you can do is “set and forget,” Humphrey Yang, the personal finance expert behind Humphrey Talks, previously told NextAdvisor.
Former NextAdvisor reporter Ryan Haar contributed.