Ethereum is recognized among the top currencies after Bitcoin. It has seen specific ups and down but has managed to retain its position as the second most crucial cryptocurrency with a higher market cap ratio. It has also seen a downfall, with its total market share decreasing to 62 percent, as estimated in 2021.
After the defeat, Ethereum managed to get a quick rise in market value and has a present market value of 1820 dollars per Ether. The total increase in Ethereum is around 49 percent.
Are crypto Exchanges ready to sell Ethereum?
One of the primary reasons for institutional investors’ interest in this currency is that the Federal Reserve is trying to get its interest rates back on Ether. According to some digital currency experts, the rise in the interest rate is for the best benefit of the government and will never see a fall.
The massive setback to ether is linked to the fall in the price of stock shares. The flow of ether is quite natural, per the statements of investors and experts in Ether. It is also said that momentary setbacks in the price of Ether are natural. If you want to profit within two to four weeks, you can buy crypto other than Ether.
The Rise in ETH Price (The Short-Term View)
There are different views regarding the ETH price rise. The first is the short-term view, while the other is the long-term view. At first, we will move on with the short-term outlook.
Is it feasible to buy Ethereum from a crypto exchange?
The surge in the crypto markets has been visible after the FDIC’s announcement that it would back all the deposits in the Silicon Valley Bank. After this announcement, the collapse at the Silver Gate Capital was observed.
This process has calmed down the issues of bank runs across the United States. As a result of this entire phenomenon, a broader rally in crypto markets can be observed.
This process has helped Ethereum retain its market price after the central authorities of the federal government finished the aggressive hike in the interest rate. This step has put the rate of inflation under proper control. The inflation rate in 2022 will reach 9.1 percent. The inflation rate has fallen to 4.9 percent after all these incidents.
What is hiking’s interest?
Hiking interest is regarded as a financial policy devised by the tax hike. This rise in tax amounts resulted in an increase in purchasing costs along with a reduction in demand and supply. It is also regarded as a hostile move for risk assets, including crypto and stocks. The risk of recession is also increased through this process.
If the federal authorities initiate the ease in rates, there can be some benefit for the risk assets of the market, such as Ethereum, which can be beneficial in the long run.
There are specific reasons that have happened in the past that prove to be bullish for Ethereum. One of these approaches includes the upgrade of ETH to the proof of stake. The recent update to Ethereum merge has certain implications. There were punch lines that were apparent reasons to be bullish.
These reasons are mentioned in the following lines:
The first reason is that the validators, after a post-merging process, can earn the year on their staked ETH.
The second reason includes the fastest transactions.
The third reason is that the net issuance dropped considerably after merging.
The fourth reason behind this is the potential of Ethereum for deflation.
The rapid increase in security and scalability is also a significant reason.
As proof that stake does not work, it proves to be environmentally friendly.
Despite all of the fore-mentioned reasons, the long-term linking of the macro backdrop cannot be escaped through the broader crypto space and Ethereum.
The reasons behind the ETH price drop (Long Term View)
The short-term reasons have been described in the above section. In the present section, we will explain the long-term view, which is related to the reasons for the current Ethereum price as well as the price drop of Ether.
Value Dropping of Ethereum
One thing is as clear as pure water; the Ethereum price is at a setback. We will discover some causes and reasons behind this setback in the preceding lines.
One of the primary reasons we have already illustrated above is the response of the Federal Reserve toward the inflation ratio. The hiking interest rates have been increased by 500 basis points in the circulating supply.
This financial policy negatively affects volatile investments and decentralized applications such as Ethereum and other cryptocurrencies. The Federal Reserve plotted against the crypto world by increasing interest rates, negatively affecting crypto projects and markets.
As per the resources of Federal Reserves, inflation has been conquered by such damaging policies. On the contrary, the CPI estimates have demonstrated that no progressive measures have effectively controlled the inflation ratio. Some of the key factors are mentioned in the proceeding lines:
In other categories, an increase in the ratio of used cars significantly affects the price offsets, which can slow down the inflation rates.
The suggestion by the recovery of the rental index also proposes that the inflation ratio can prove transitory.
The increased in used car prices has increased the inflation ratio from 0.6 percent to 4.4. percent. This phenomenon can also predict inflation’s effect on other areas of trade.
Inflation Is Affecting General Market:
If we go through the inflation ratio in the general market, the labor market has been the biggest victim of inflation. The whole process of strategies has failed the aim of getting inflation under control, I.e., at two percent.
The current assessment proposed by the experts is a 5 percent chance of an FOMC hike. The general market is the biggest target of inflation which affects all dynamics of life. Inflation affecting all dimensions of life will also affect trading Ethereum.
Crypto And Interest Rates
Now the question arises that when crypto has nothing to do with physical cash as it is decentralized finance and is void of taxes and transaction fees, how general inflation rate can affect the Ethereum network as well? The question seems simple, but the answer is quite complicated.
Crypto markets are working on investments, and financial crises have hit investors. The investors are either borrowing money from the banks or working with the institutions that offer loans to the investors, so, one way or the other; the whole process is going on with the borrowed money or loans.
By keeping the entire statement in view, the crypto markets have no immunity against the leverage prevailing in the fiat market. Crypto offers scalability and regularity to the general market by offering mega-profits and turnovers on even small investments.
If crypto is not helping the society, many governments would have removed this facility from their countries.
Dropdown in the Ethereum Prices
NASDAQ and Ethereum are correlated. This correlation is around 80 percent as Ethereum follows NASDAQ. NASDAQ faced a 78 percent crash in 2000 and 30 percent in the current scenario. The level of NASDAQ is at 3500 with recent evaluations.
With this low trading of NASDAQ, the regressions in crypto, including Bitcoin and Ether, can go down further. Some assumptions can be made from the present scenario, which are mentioned in the proceeding lines:
Firstly, If NASDAQ falls to 3500, the market cap per bitcoin will be around 8254 dollars.
Secondly, With the fall of NASDAQ, the Ethereum prices would be around 143 dollars. This price range comprises a decline of 92 percent from the current position.
The maximum price range of Ethereum
After a thorough analysis of the crypto world, its link with general inflation, and the lowest possible price for Ether, now the question arises how high the price range of Ethereum can be?
Let’s find the answer analytically. With the current perspectives, the travel to Ether towards its previous price, I.e., 4379 per Ether, seems impossible, but thanks to the volatile investments because decentralized finance often sees this type of setback as short-term happenings. The long term always unfolds the door of success and stability for crypto.
Other happenings of crypto
Another critical point that is mandatory before finding an appropriate answer to our question of whether it is a good investment is to know what else is happening in the crypto world. There are specific points that need the consideration of the investors.
The flip in the crypto market has affected Ethereum and all other cryptocurrencies. The crypto world is also trying to find a way out of this situation. The rules and regulations are presented to set a bar against the dropdown of the market price of each crypto. With an overall positive crypto investment strategy, it will be easier to consider crypto as a positive investment tool.
Effect of news of ETH price:
The effect of the news on ETH price is more significant because crypto is all about the impression in the masses. The more popular a currency is, the more investment will be made by the people.
The negative news can make a way to the downfall of the crypto. The whole life, market capitalization, investment ratio, profit, and turnovers in crypto all depend on the level of popularity a crypto has.
Ether is lucky in this stance that no significant security breach or any issue has spread negativity against it. The only problem that is being faced by this currency is that it is a victim of inflation and FED policies like many other cryptos.
Reasons to invest in ETH:
There are several reasons which make Ether the favorite crypto for many investors. Some of them are mentioned in the proceeding lines:
No security breach
The first and foremost reason mentioned in the lines is that this currency has not faced any security issues from its issuance. There is no security breach, fraudulent activities, loss of Capital in scams, or targeting of victims. These traits of being a secure crypto make Ethereum an apple of the eye for investors.
This currency has a solid chance to grow back to the original and even surpass it in the upcoming year. The chances of this growth are around 80 percent by the crypto experts.
It is one of the favorite currencies of almost all investors. Unlike Bitcoin, which falls to the lowest price during inflation, the currency has a minor effect on inflation.
It shocks the investor to compare the prices they purchase and must sell the bitcoin to save their investments.
Ethereum always tends to grow back due to its flexible structure to overcome the side effects of inflation.
Shapella upgrade offers the alteration of the consensus and execution layers of Ethereum. This upgrade plays the best game because this upgrade is visualized after some time when Ethereum prices speed upward.
No Crack Down for Illegal Activities
It is one of the asset classes which has never seen any crackdown against illegal activities which negatively affect any crypto. This is because no hackers or money launderers can surpass the security layers of crypto unless any crypto handler does not allow it.
This crackdown has affected many cryptocurrencies, but Ethereum blockchain technology is safe from all such crackdowns.
Feasible For Long Term Investment
Many well-known cryptocurrencies are thought to be adventitious for short-term investments. Quick significant investments can lead to marginal turnovers and vice versa. The case with Ethereum is the opposite.
It is the first cryptocurrency that can offer vast and risk-free turnovers for long-term investment without getting affected by inflation, gas fees, and other issues at a grander scale.
Low investment scale with high-profit gains
The best benefit of this app, which makes it a smart investment, is that business people can earn huge benefits with quite a low investment scale.
In case of a dropdown in the market value of Ethereum’s price in the crypto market, there is no harm in holding your little Ethereum investment in the bank account. The rise in Ethereum investment is a definite thing.
From the above argumentation, it is evident that the volatile investment is one of the profitable businesses which needs no second thought.
Ethereum, despite all the market dropdowns, is considered a good investment since being highly volatile decentralized finance makes It stand out among all the cryptocurrencies.