Ethereum Price

The ongoing volatility in the crypto market is seen to hit Ethereum price even though there was a quick recovery seen in the previous week

Ethereum didn’t begin 2022 on an impressive note. To make matters worse, in the first month of the year, Ethereum's price fell below its resistance level of US$3,500, signaling an approaching slump in the cryptocurrency market. This happens at a time when Bitcoin, ETHER’s direct competitor, has been facing major hits since last October.

Following Bitcoin’s success, Ethereum emerged as the second-most-important cryptocurrency in the digital token sphere. Owing to its amazing applications and features, ETHER gained a market capitalization of US$412 billion. Although ETHER has positioned itself on a strong spot, the so-called ‘Ethereum Killers’ like Solana, Cardano, and Avalanche are trying their best to take over its position. Besides, these competing cryptocurrencies are trying to improve on Ethereum’s biggest flaws. If ETHER loses its user base and developer lead in 2022, the cryptocurrency’s price will fall drastically. Fortunately, such scenarios are not on the radar for now. Investors are trying new methods like burning to keep Ethereum’s price afloat.

According to predictions, Ethereum‘s inability to surpass US$4,000 resistance since the beginning of 2022 indicates a bearish trend. Forget the US$4k mark, ETHER might have a hard time surpassing US$3,800 as the bears are mounting a stiff challenge there.

Therefore, if the price continues the downward rally, then the nears will again try to pull the Ethereum price below the support zone. If they manage to do that, the price will hit as low as US$3,000 before making a comeback.

Fortunately, the Ethereum network is trying disruptive ways like burning digital tokens to gain value. Since the Ethereum 2.0 upgrade was rolled out, over US$2.54 billion worth of ETHER has been burned. This is believed to help the cryptocurrency gain value in 2022.

While Ether has recently dropped back down to as low as US$2,200, that still represents a lifetime return on investment (ROI) of about 707,296% at the time of writing. A differentiating feature for Ethereum unlike Bitcoin and other cryptocurrencies is its utility as a software network that allows developers to build and power new tools, apps, and NFTs.

The blockchain-based software network has many uses and applications across the tech world, especially for gaming, music, entertainment, and decentralized finance (DeFi) — making it one of the most popular and widely-used cryptos this past year.

What is the Reason Behind Such Drop?

To address the high-cost and transaction challenges, Ethereum planned to upgrade its network to proof-of-stake. However, Ethereum 2.0 was supposed to be completely rolled out at the beginning of 2022. But the upgrade has been delayed for a couple of months. This is also having an impact on Ethereum's price.

It is not just Ethereum that is facing a slump in the last two months. Therefore, experts say that Ethereum could be bearing the massive selling pressure felt elsewhere in the cryptocurrency market in recent weeks. Bitcoin, the major cryptocurrency in the market, is also recording severe price hits in recent months. The ongoing volatility in the crypto market is seen to hit the prices of Ethereum even though there was a quick recovery seen in the previous week. The currency is observed to lose about 5% in the last week.