Ethereum price: Massive slide as market faces bearish pressure
Ether has showcased an average drop of -6% over the last 7 days. Near-term surge seems increasingly unlikely.
- As liquidations continue to happen across the board, the crypto market has witnessed staggering sell-off volumes over the last 24 hours.
- Experts claim a healthy price correction had been on the cards for some time now.
- Over the course of the past week, BTC, LTC, and BCH have showcased significant value dips of 22%, 12%, and 21% respectively.
Though many were expecting Ether to continue on its path of economic domination after the premier altcoin scaled past the $1,420 mark on January 19, the market as a whole seems to be in the grips of insane bearish pressure right now, with the currency now trading around $1,150. As a result of this most recent dip, the gains incurred over the last week by all of the cryptocurrencies in the top 10 — barring USDT (for obvious reasons), DOT, and LINK — have been wiped out overnight.
Also, as was to be expected, any time the market is faced with any sort of bearish pressure, prominent players from the field of traditional finance seem to swoop in claiming that “they were right”. This time around, Peter Schiff, Euro Pacific Capital chief economist and strategist, recently appeared on a network television program claiming that Bitcoin is “fool’s gold” and that the crypto sector is a bubble waiting to burst.
That being said, it should be highlighted that Mr Schiff acknowledged in a recent conversation with Morgan Creek Capital’s Anthony “Pomp” Pomliano that he regrets not buying Bitcoin when it was $10, adding: “I’m already kicking myself, I had that opportunity, I could already be a billionaire if I had only bought it back then… I should have bought it when I first heard about it.”
What’s up with all the volatility?
To gain a better understanding of where Ether might be heading and whether or not the crypto bull market is dead now, Finder spoke with Martin Froehler CEO of Morpher, a platform that allows users to purchase stocks, cryptocurrencies, forex, and commodities. In his view, after ETH hit $1,420 it was only natural that a large number of traders liquidated their positions to monetize their gains. He further added:
“It often takes a shakeout of short-term speculators (‘weak hands’) before a market can break above its previous all-time high in a sustainable way. Short term corrections are normal and healthy during bull markets. Ethereum’s bullish momentum is not broken at all. Ether gained 50% on Bitcoin since the beginning of this year. Ether/BTC was trading at ~0.025 on Jan 1, 2021, and trades at ~0.038 on Jan 21.”
Also, it should be pointed out that a lot of people still continue to compare cryptocurrency in relation to fiat, which is unfair since the latter is susceptible to heavy price manipulation — à la stimulus packages worth trillions of dollars. In this regard, Froehler stated that even as Ether has dropped against the Dollar, it has been holding strong against BTC during this recent correction. Not only that, in his opinion, after this current uncertainty fades out, Ethereum will re-test its all-time high again, potentially breaking past its all-time high within the next couple of weeks. He opined: “I expect Ether prices above $2,000 at the end of this quarter, and well over $5,000 at the peak of this cycle.”
Similarly, providing his thoughts on the subject, Paolo Ardoino, chief technical officer for cryptocurrency exchange Bitfinex, told Finder that this new dip is quite normal and nothing that needs to be looked into quite deeply, noting:
“While ether recently moved past its previous all-time-high, we have seen that it’s normal for markets to have consolidation periods after important moves. We don’t particularly read anything into the current price of ETH.”
Short-term volatility is normal but it’s exposing Ethereum’s limitations
Even though seasoned cryptocurrency investors have come to expect short-term volatility at every turn of the way at this point, for new entrants, such an overnight impact can be a bit shocking, to say the least.
In this regard, Jack O’Holleran, CEO of Skale Labs, pointed out that until we see a clear Layer 2 solutions ironing out some of Ether’s existing scalability issues, the heightened value of ETH will continue to equate to higher costs for the utility of the network, primarily due to increased gas fees.
Similarly, on the issue, Froehler is of the opinion that while the Ethereum network stands to become the premier decentralized dev ecosystem of the crypto universe, the protocol is still largely a work-in-progress, adding:
“As soon as Ethereum overcomes its scaling issues via Ethereum 2.0 and DeFi starts eating the world, Ethereum will decouple from Bitcoin for good. It may even surpass Bitcoin’s market cap one day. Until then Bitcoin will keep influencing every other cryptocurrency.”
What lies ahead for Ether?
Though a lot is made of cryptocurrency price corrections every time they do inevitably occur, it should be remembered that the industry as a whole is quite nascent and the methods used to evaluate most digital assets are still largely underdeveloped. However, O’Holleran is of the view that as the market continues to mature, the impact of pure BTC speculation will have a decreasingly lower impact on the price of other digital currencies including Ether.
Not only that, increased awareness regarding crypto tech will most likely result in investors starting to look at things like a project’s network usage, dApp development rate, etc — that is, fundamentals — as price drivers for Ethereum rather than things like perceived value, future projections made by analysts, etc.
Disclosure: The author owns a range of cryptocurrencies at the time of writing