Source: PaxForex Premium Analytics Portal, Fundamental Insight
Don't get your hopes up just yet, but Ethereum is gaining momentum again. The world's second most valuable cryptocurrency rose above $3,000 on Tuesday, something it hasn't done in nearly three weeks. Ethereum is still nearly 40 percent below its peak in mid-November, but momentum is back on its side.
Two months ago, there was a question about whether Ethereum could break through the $5,000 ceiling. Late last year, the digital currency hit an all-time high just below $4,900, and that was a natural new frontier to conquer. That didn't happen, so now might be a good time to revise expectations and set a more realistic round goal. Can Ethereum reach $4,000 this year? That may not seem like an overly ambitious goal, but it means more than 30 percent growth from current levels. Let's evaluate Ethereum's chances of reaching the $4,000 mark in 2022.
Ethereum has raised the bar in blockchain technology by pioneering smart contracts. It continues to be a leader in smart contracts that power trading platforms, financial services, and gaming applications with non-fungible tokens (NFTs). It currently accounts for 55% of the total blockchain value (TVL), which is the assets currently used in all decentralized financial applications.
Ethereum's market share has declined over the past year as more efficient protocols have emerged, but there is good news in terms of transaction costs. Arcane Research, which tracks the cryptocurrency market, reported earlier this month that transaction costs for exchanging Ethereum tokens reached a six-month low.
The popular cryptocurrency has a long way to go to close the gap with more flexible options, but it looks like it is finally moving in the right direction with the transition of its platform to Ethereum 2.0. The process itself probably won't be completed until next year, but the next critical phase - the one that will allow for full-fledged stacking - could be just three months away.
Ethereum's transition to the proof-of-stake method is important from multiple perspectives. It will help make Ethereum cheaper, easier, and more efficient to use. It will also help alleviate some of the concerns of environmentalists that the current proof-of-work method is not environmentally friendly. There are still hurdles to overcome to make Ethereum a leader in these areas, but it will allow Ethereum to start gaining market share when it comes to TVL, rather than just gradually losing its grip on the tug-of-war.
Delays have been common for the transition to Ethereum, so it's understandable why traders are nervous. If the transition to Ethereum 2.0 continues to be delayed to a later date, it will mean that an increasing share of the market - and possibly a share of consciousness - will move to other digital money. The entire cryptocurrency market has been vulnerable, especially in light of various countries, including the U.S., stepping up their efforts when it comes to regulation.
The good news is that awareness of cryptocurrency as an alternative asset class is gaining momentum around the world. Rising inflation and political instability may also fuel interest in cryptocurrencies as an alternative to countries' official currencies. Reaching the $4,000 mark for Ethereum in the coming months is more than possible, even if bears point out that the same volatility that makes reaching a higher mark possible also makes reaching $2,000 as the next big round number possible.
It's easier to be optimistic, especially with a clear plan to develop Ethereum as a tool in the growing universe of decentralized finance. The sentiment is getting bullish, and Ethereum's $4,000 price at the end of this year should not take anyone by surprise.
As long as the price is above 2645.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 2958.64
- Take Profit 1: 4037.00
- Take Profit 2: 4867.00
Alternative scenario:
If the level of 2645.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 2645.00
- Take Profit 1: 2175.00
- Take Profit 2: 1700.00
