Do you want to invest in popular and time-tested cryptocurrency Ether? In our article "ETH/USD chart", you can learn lots of curious facts about it.
We will tell you how the ETH quotes have changed over the past year, which factors affect its price, and whether it is worth investing in this token.
Facts about Ethereum
The economy is cyclical. In order to adapt to different market conditions, people use different methods to protect their funds. Someone keeps them in a bank, someone invests in shares of companies or real estate.
One of the best options to hedge capital from inflation are cryptocurrencies. The crypto market is constantly developing and new assets appear.
As you probably know, Bitcoin is the world's first cryptocurrency. Tens of thousands of altcoins have been created later.
Ether was among them. It has been gradually gaining popularity among crypto enthusiasts. In addition, it is much cheaper than BTC.
At the time of writing the article, ETH was trading at about $2,600, while Bitcoin was trading at $39,200. BTC is almost 16 times more expensive than ETH. Ethereum has a high market capitalization of $317 billion, which makes it world's second-largest cryptocurrency by market capitalization, second only to Bitcoin. Another big advantage of Ethereum is that it has many functions. Thanks to the smart contract program that runs on the Ethereum blockchain, its network is considered the base for a new economic model. How do smart contracts work? Here is an example. Imagine a coffee machine. You get your drink after you drop coins into it. In fact, a simple contract was made. At the same time, no third parties were involved. Smart contracts work on a similar basis. These are digital contracts. Their execution is controlled by the Ethereum network. The parties who have entered a smart contract will not have to go to court or to government agencies if one of them violates the terms. In this case, it is simply impossible to breach them. Let's go back to the example with the coffee machine. If you paid for the coffee and took it away, the device would not be able to return the drink back. Thus, Ethereum is a thoroughly developed ecosystem that does not depend on state institutions, regulators, and so on. Nowadays, smart contracts are popular not only in the gambling and art industries but also in the field of decentralized finance.
As we have already told, the ETH price totals $2,600. The token reached a historic high of $4.800 in November 2021.
It hit its lowest level of $0.4 in October 2015.
The year 2021 became quite important for the entire crypto market. New institutional and private investors purchased digital assets, which led to a meteoric rise in quotes.
Ethereum was no exception. In a year, it surged by almost 400%: to $3,800 from $775. For comparison, BTC jumped by 65% over the same period. Thus, between March 2021-2022, BTC, the main competitor of ETH, climbed by almost 47%.
As you can see on the chart, over the years, the ETH price has been rather volatile. In some periods, its price fluctuations were rather sharp.
However, all cryptocurrencies have high volatility, not Ethereum only.
In the table below, you can see how the ETH quotes have been changing over the years.
The ETH price in dollars (at the start of each month)
How has the market capitalization of Ethereum changed over this period? This indicator is important for investors as it reflects the value of all coins in circulation.
So, in mid-March of 2021, the market capitalization of Ethereum was almost $205 billion. By March 15, 2022, it had increased to $317 billion.
The share of Ethereum in the crypto market soared to 17% from 12%.
Since the creation of cryptocurrencies, people have become less skeptical about digital coins. Some investors still consider the crypto market a "bubble", while others are actively investing in coins.
However, the constantly changing charts force both supporters and opponents of Ether to think about what factors affect its price. After all, the ETH movements sometimes surprise even experienced traders
Skeptics believe that the main reason for this is the pump and dump schemes. It is a strategy built on the artificial sharp growth of the cryptocurrency due to the coordinated actions of participants in a short period of time.
Analysts also admit that sometimes such schemes take place in the market. However, in their opinion, its impact is greatly exaggerated. They stress that there are certain circumstances that really shape the trend. Some of them are quite common for the crypto market, whereas some only impact ETH. The first factor is the ratio of supply and demand. When there are few people willing to buy Ethereum, the price decreases and vice versa. Another important factor is the popularity of the asset and news about it. The more often Ethereum hits the headlines, the more traders will be willing to invest in it. In turn, it will bolster its price. However, this scenario will come true only if the news is positive. Otherwise, the price will decline. Speeches by politicians, policymakers, or influencers also impact its price. Even a small celebrity tweet about cryptocurrency could either trigger a rise or a fall. New innovations in the Ethereum ecosystem also play a huge role. We have already mentioned smart contracts that run on the Ethereum blockchain. These are programs that automatically execute transactions if certain conditions are met, without the need for an intermediary. The more speculators use the services of the Ethereum ecosystem, the higher the price of tokens. Another important factor is changes in the legislation of different countries on cryptocurrencies. Moreover, we can talk not only about the steps taken by certain states but even about plans to tighten or ease laws. For instance, in the second half of January 2022, Ether fell by almost 28% in a week amid reports about the possibility of a ban on digital currencies in Russia.
Analysts also note the influence of BTC on the ETH quotes. The fact is that the movements of these cryptocurrencies are highly correlated.
Apart from the above mentioned factors, Ether is affected by:
Price and market capitalization are not the only indicators that could help you estimate the real value of any cryptocurrency. Experts also use other data for analysis.
For example, one should pay attention to the number of ETH addresses in the blockchain. Currently, the number of addresses holding at least 0.1 coin totals almost 7 million.
This is a record high for the entire existence of ETH. Moreover, in 2021 this indicator increased by 1.7 times.
According to analysts, this is quite a significant increase.
There are several reasons for such a steady rally that has been unfolding for many years. To start with, Ethereum is expanding thanks to DeFi projects - financial services and apps in the Ethereum blockchain. The Ethereum platform ranks first in the blockchain system in terms of the number of DeFi projects. Its share is more than 65%. Secondly, traders can purchase NFT or non-fungible tokens via the Ethereum platform. They are also called unique digital items. At first, NFTs existed exclusively on the ETH blockchain. Nowadays, the share of Ether in the NFT market exceeds 90%. Another indicator is the hashrate. This is the power that is needed to mine cryptocurrencies, including Ether. In 2022, the Ethereum hashrate surpassed 1 PH/s, the highest level ever reached by the Ethereum hashrate. It means that the ETH mining difficulty increases, which fuels its price.
Given the strong rally in 2021 and the pace of growth surpassing Bitcoin, analysts advise to invest in Ethereum.
According to the consensus forecast, ETH is highly likely to grow in 2022. The estimated price at the end of the year may amount to $10,000.
Apart from an increase in the ETH price, analysts also predict a rise in market capitalization.
Such optimistic forecasts are based on several factors that potentially may stimulate a rally of ETH
Developers constantly upgrade the Ethereum blockchain. So, the network will switch to version 2.0. Thus, it will become more environmentally friendly and secure. Secondly, the Ethereum platform has more functions than, for example, the one of Bitcoin, e.g.smart contracts. Therefore, Ether is not only a tool for payments and savings but also a platform for creating new projects. Thirdly, Ether is a relatively younger coin than BTC. It means that it has more room for development. Last but not least, founder of the token Vitalik Buterin is confident about the bright prospects of ETH thanks to a professional team and an Ethereum development strategy.
Recently, the ETH/BTC pair has been compared with EUR/USD. Although the euro is a younger currency, it has managed to compete with the US dollar which is considered the forex king.
Crypto analysts believe that ETH is likely to show a similar trend. Now, it is the only rival of Bitcoin. It also surpasses it in some indicators.
Nevertheless, one should be extremely careful when making a decision to invest in this rapidly developing token. By no means should you invest your last money or your entire fortune in the crypto asset.
If you are a novice investor, start with a small amount and gradually increase your capital by opening profitable trades. IFXBIT is a perfect trading platform for crypto investments.
Read also our article : "ETH price forecast" "What is the cost of Ether in US dollars" "ETH difficulty chart"