This Saturday, the price of Ethereum recorded a decline of almost 8%, thus dropping to its lowest level in 15 months . Ethereum has indeed fallen below the $1,600 mark, just after the first merger tests on its Ropsten network. Remember that these tests are necessary before the update The Merge, scheduled for this summer. Worse still, as of this writing, Ethereum price has risen to $1,267, how high can it go?
A continuing downward trend
The cryptocurrency market, driven by the high volatility of Ether and Bitcoin, has recently had a bad time. Stock markets also fell on Friday following the release of an inflation report showing that price increases are much higher than expected.
According to NextAdvisor, while Bitcoin has lost 36% of its value since the start of the year, Ethereum has lost more than 51% . Analysts say this may be due to the anticipation of the network transitioning from proof-of-work to proof-of-stake. As a reminder, The Merge makes it possible to improve transactions on Ethereum, but above all to make them more efficient and more sustainable.
Increased volatility for Ethereum
Last December, Ethereum broke above $4,100 and then hovered between $2,100 and $4,000 over the following days. In January, the cryptocurrency fell below the $2,200 mark and this week the pattern is repeating itself, as the price of the asset is between $1,600 and $2,000.
Recall that the end of the year 2021 was rather positive for the asset which set a new record when it exceeded $4,850 on November 10. The upward trend lasted until early December before falling again at the end of the month. Ethereum still ended the year above its starting level before moving back above $1,000 in January 2022.
Even with the current situation, experts remain optimistic, because according to their forecasts, the price of Ethereum could potentially reach or even exceed $12,000 this year .
What should investors do?
As with any long-term investment, experts recommend ignoring the ups and downs. Indeed, the latest price up in no way means that Ethereum’s volatility is entirely gone .
Investors have to wonder if cryptos will continue to see compound and exponential growth . Of course, nothing is certain in this sector and it is simply impossible to guarantee that the value of a cryptocurrency will increase or not.
However, experts advise never to invest more than 5% of your asset portfolio in cryptocurrencies. Indeed, this could be an obstacle to achieving other financial goals, such as repaying high-interest debt or retirement savings, for example.
In summary, to avoid headaches, it is better to ignore the hype surrounding new highs or lows of Ethereum and instead aim for a long-term strategy such as DCA. In addition, it is essential, if you want to invest, to proceed on a reliable platform. As such, we can for example advise you eToro which recently obtained its PSAN registration in France.