As the effects of inflation in the United States continue to be felt across the globe, digital assets such as Ethereum continue to go through a hard time. This week, Ethereum has struggled to hold above $1000 after it last fell below $900. This was the lowest level the asset had ever come to since January 2021. Other assets, such as bitcoin, are also going through a tumultuous moment as the market players retreat from risky assets.
Both the stock and the crypto markets fell after the Federal Reserve raised interest by 0.7% following reports of missed targets in the inflation report released early this week. So will Ethereum prices go up in line with Ethereum price prediction or continue going south ?
Table of Contents
Factors affecting the trend
Pundits believe that Ethereum has been underperforming as it transits to proof of stake and proof of work. Recently, its Ropsten network completed a test merge which is vital in its upgrade. Since the upgrade is expected to change how transactions on the network are ordered, it is likely to have a positive impact on its price. But the transition to proof of stake may hurt financial minors who had initially invested heavily in the hardware.
But as long as the war in Ukraine is still on, plus the surging inflation, traders will still see volatility in the market. With the shifting of US monetary policy and as long as the crypto market continues to track the stock market, then the recent slumping of the prices is likely to continue.
Elsewhere, since government officials continue to show interest in cryptos and are trying to even create government-issued digital currencies, we expect the prices to start rising. Thus, the impact of the recent slump may take a while before they are overcome. In 2021, Etherium traded at $4,850 through to December before it fell back towards the end of the month. The same was the case for bitcoin, which reached a record high of $68,000 on the 10th of November.
Experts believe that the current low prices are the normal ups and downs that should be ignored. As such, investors should never put more than 5% of their portfolio in cryptocurrency.
Are there signs that the recent downswing has come to an end?
Yes, Ethereum rose by 0.76 % on Saturday, which brought the 6-day losing streak to an end. Although the upside was modest, technical indicators showed that ETH was below the 50-day EMA. The asset found support at the $1024 level but fell slightly below the 10101 resistance level. ETH hit a late high of $1077 before easing to establish a new support level at $1024.
Below are the keypoints worth noticing when doing future trades.
- The crypto market forces are still weighing heavy on Ethereum, and bearish sentiments are lingering; hence the prices may not start rising soon.
- The merge is likely to trigger the prices to start rising.
- The US monetary policies will remain negative as the Fed tries to end the recession.
- Migration to the proof-of-stake protocol is likely to give the unit a boost.
- The expected outcome from the SEC V Ripple case will likely impact its price.
ETH still sits below 50-day EMA which pulled back from 100-day EMA. Also, the 100 days EMA is pulled from 200-day EMA, so the price will likely fall until it moves via the 50-day EMA.
But according to analysts, Ethereum buyers are trying to build up Ethereum prices. So if they can push the price above $1,000, they could build enough momentum to rally the asset up to $1,500.
On the other hand, if the bears manage to sink the price below $880, it would signal the next round of downtrend. The currency could then decline to around $680.
Whatever happens in the short run, there are signs that once the prices start rising, there will be ups and swings that will see them hit the $2,500 mark by the end of the year.