Is Ethereum a Good Investment?

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The price of Ethereum fell by more than 63% in 2022 as demand for the coin evaporated. The coin, which traded at nearly $5,000 in November 2021, fell to a low of $885 in June of this year. ETH traded at $1,330, which was about 35% from its September high, giving it a market cap of grossed more than $162 billion.

Demand for Ethereum is falling

There are two reasons why the ETH price has been in a steep downtrend in recent months. First, the currency crashed due to the ongoing changes in monetary policy in most countries. In the United States, for example, the Federal Reserve has implemented several rate hikes. It has raised interest rates by 225 basis points this year and lowered its quantitative tightening (QT) policy.

As a result, the prices of most assets such as cryptocurrencies, commodities, bonds and stocks have all crashed. The Dow Jones, S&P 500 and Nasdaq 100 indices fell more than 20% this year. At the same time, bonds have fallen sharply this year, pushing their yields to their highest level in years. Crude oil and gold have also fallen.

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Second, the price of Ethereum fell as activity within its network continued to decline. According to DeFi Llama, the total value locked (TVL) in its network has crashed from over $110 billion to about $30 billion. Similarly, NFT activity has been on a deep downward trend in recent months.

Still, there are two main reasons why Ethereum is a good investment. First, after Ethereum Merge, it became possible for people to bet the coin. According to StakingRewards, ETH worth $19 billion has been staked and holders earn about 5%.

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Second, Ethereum still has a strong market share in the blockchain industry. It has been widely used in industries such as decentralized finance (DeFi) and non-replaceable tokens (NFT). This role will continue to grow in the coming years.

Ethereum Price Prediction

The daily chart shows that the Ethereum price crashed to a low of $885 in June of this year. It then made a strong comeback to $2,000 as investors waited for the Ethereum Merge event. Recently, however, this bullish momentum has faded and the coin has fallen below the key support level of $1,423. This was an important level as it was the lowest point on August 28.

Therefore, there is a good chance that the ETH price will continue to fall as sellers target the next key support level of $1000. In the long run, the coin is likely to bounce back and test the resistance again at $3,000.

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Buy Ethereum?

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