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Ethereum’s price dropped back below $1,600 Tuesday, erasing Monday’s gains that took it to nearly $1,700.
The drop resumes a downward trend that kicked off last week following comments by Federal Reserve Chairman Jerome Powell that raised the likelihood of more Fed rate increases ahead. Bitcoin saw a similar fall Tuesday, dropping to its lowest point since June.
Ethereum’s price soared more than 40% in July after the network announced a Sept. 19 launch date for the upgrade, also known as “The Merge.” It nearly hit $2,000 in mid-August but fell just short. After several delays, experts are waiting to see how investors and companies building their tech on ethereum’s platform respond to the changes.
“Investors are taking note of the ethereum merge due to take place [this month]and is being seen as a promising tailwind by the majority despite the risks,” says Marcus Sotiriou, a market analyst at digital asset broker GlobalBlock.
Ethereum has been underperforming bitcoin so far in 2022, which experts say could be due to building anticipation for the network’s transition from proof-of-work to proof-of-stake and a broader market retreat from risky assets.
Experts say the crypto market is reflecting heightened volatility that comes with war, continued surging inflation, and shifting US monetary policy. Experts also point to other factors like the crypto market tracking the stock market, more mainstream adoption, and slumping prices in recent months as contributing to what we’re seeing with crypto prices right now. Government officials have also continued to show an interest in more crypto regulation and even the possibility of creating a government-issued digital currency. Bitcoin’s price has had a similarly rough stretch lately.
All this has made for a shaky first half of the year for ethereum. Ethereum’s price has been between $1,500 and $1,600 so far this week. Here’s how ethereum’s current price compares to its daily high point over the past few months:
| One Week Ago (August 30) | One Month Ago (August 7) | 3 Months Ago (June 8) |
|---|---|---|
| $1,555.18 | $1,693.30 | $1,818.39 |
Prices updated: September 6, 2022
After topping $4,100 on Dec. 27, ethereum has steadily trended downwards, albeit with rallies here and there, ranging between $900 and $3,800 throughout the year. Many experts are still bullish, despite the recent slump, predicting ethereum’s price could potentially hit and exceed $12,000 this year.
Ethereum still had a relatively strong close to 2021. ethereum set a new all-time high when it went over $4,850 on Nov. 10, and it carried that strength into December before falling back by the end of the month. Even with the late slump, Ethereum closed the year way over where it was at the start: In January 2021, ethereum’s price was just a little over $1,000.
Like ethereum, bitcoin has stalled over the past month as well The token set a new all-time high when it went over $68,000 on Nov. 10. The future of cryptocurrency is sure to include plenty more volatility in the price of bitcoin and ethereum, and experts’ advice for investors remains the same.
What Should Ethereum Investors Do?
As with any long-term investment, experts advise to ignore the ups and downs. The latest high price doesn’t mean ethereum’s volatility has gone away.
“The real question is, owning these coins, are they going to continue to experience compound, exponential growth? Nothing in the fundamentals of cryptocurrency tells me that answer is yes,” says Jeremy Schnieder, the investing expert behind Personal Finance Club.
Because there’s no guarantee that any crypto’s value will increase, experts advise to never invest more than 5% of your portfolio in cryptocurrency. Never invest at the risk of not meeting other financial goals like paying off high-interest debt or saving for retirement.
If you’ve met all of those benchmarks, the best thing you can do is ignore the hype around new record highs or lows. Like with traditional, long-term investing, the best thing you can do is “set it and forget it,” Humphrey Yang, the personal finance expert behind Humphrey Talks, previously told NextAdvisor.
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Former NextAdvisor reporter Ryan Haar contributed.
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