After the Fed raised interest rates to fight inflation and a report showed U.S. GDP fell in the second quarter, yet Ethereum’s price rose 15% last week. Second-largest cryptocurrency has dropped from $1,700 to $1,500.
According to analysts, this week’s beneficial price movement demonstrates that these two economic indicators have been priced into the markets. This optimism may reflect markets’ anticipation of a more aggressive Fed approach.
This follows Ethereum’s 40% surge in July, when developers released a rough software update timeline.
This upgrade, called “the Merge,” will change Ethereum’s transaction sequencing, making it more efficient and scalable. It’s slated for September 19, but analysts are anticipating investors’ and companies’ reactions till then.
Analysts blame Ethereum’s underperformance in 2022 for increased anticipation for the network’s change from proof-of-work to proof-of-stake and a market retreat from riskier assets. After the Fed quickly raised interest rates, crypto firms announced layoffs and suspended withdrawals, the cryptocurrency market plunged in June.
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After multiple delays, this week’s testing offers us hope for the timeline. If the next phase of testing falls short of expectations, August might see another wave of volatility.
The crypto market reflects conflict, growing inflation, and changeable U.S. monetary policy, say analysts. Experts also highlight the crypto market’s association with the stock market, widespread usage, and recent price drops. Government officials have also shown interest in crypto regulation and a government-issued digital currency. Bitcoin’s price has lately struggled.
All of this has given Ethereum a rough start to the year. This week, Ethereum’s price has fluctuated between $1,400 and $1,700. Here is how the current price of Ethereum compares to its daily peak over the previous several months:
- ONE WEEK AGO (AUGUST 2) $1,636.02
- ONE MONTH AGO (JULY 10) $1,216.85
- 3 MONTHS AGO (MAY 11) $2,344.80
Ethereum has varied between $2,100 and $4,000 since December 27. Despite a slow start to 2022, many experts predict Ethereum to reach $12,000 this year.
Despite a recent drop, Ethereum’s pricing remained strong in 2021. When Ethereum exceeded $4,850 on November 10, it established a new all-time high that it sustained until December before reversing direction. Even with the late fall, Ethereum completed the year above where it began: $1,000 in January 2021.
Similar to Ethereum, bitcoin stalled after a fantastic November; on November 10, bitcoin reached $68,000, a new all-time high. Experts expect bitcoin and Ethereum values to vary considerably more in the future.
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What Should Investors in Ethereum Do?
As with any long-term investment, experts recommend ignoring volatility. The recent high price of Ethereum does not indicate that its volatility has disappeared. The question is whether these currencies will continue to appreciate exponentially. Cryptocurrency fundamentals imply no.
Because there’s no guarantee a cryptocurrency’s value will climb, experts advise investing no more than 5% of your portfolio. Never invest at the price of debt repayment or retirement savings.
If you’ve accomplished all these milestones, ignore new record highs or lows. “Set it and forget it” is the best method to long-term investing.