Source: PaxForex Premium Analytics Portal, Fundamental Insight
Since the beginning of the year, the cryptocurrency market has made a significant comeback, surpassing the $1.25 trillion mark after commencing at approximately $800 billion. This market revival follows a period where investors sought refuge in safer assets, leading to a significant dip in the cryptocurrency market. However, the tide is turning, and many cryptocurrencies still present attractive long-term prospects, despite their recent rebound. Ethereum, for example, appears to be reasonably priced, and its value has even decreased in recent days. So, is it advisable to invest now? Let's explore.
To provide some context, Ethereum is currently the world's second-largest cryptocurrency, with its own native token and a blockchain that hosts thousands of decentralized applications (dApps). It dominates the worlds of dApps and non-fungible tokens (NFTs), which is significant because it suggests that Ethereum could play a crucial role in transforming businesses and even entertainment in the future. Another crucial point is that Ethereum is a giant in attracting developers to build on the blockchain, with over 5,800 monthly active developers using the platform as of April 1, compared to its closest rival Polkadot's roughly 1,900. This also suggests that Ethereum could become a cryptocurrency world leader in the future.
While Ethereum has its flaws, such as its intensive energy usage, slow transaction speed, and high costs, the platform is addressing these issues through updates. For instance, the proof-of-stake method of verifying transactions has reduced Ethereum's energy usage by 99%, eliminating the need for excessive computer power to validate blocks of data.
Currently, Ethereum is taking measures to improve its speed and lower costs. It has implemented rollups, which bundle transactions together off the mainnet and execute them, resulting in 3 to 8 times lower costs than transactions directly on Ethereum. However, Ethereum is still working to enhance rollup efficiency and aims to reach transaction costs of under $0.001. Ethereum also intends to launch an upgrade later this year that should decrease data storage costs, which account for around 90% of overall transaction costs. Furthermore, Ethereum's switch to proof of stake has the potential to attract a new category of investors who seek passive income from their investments.
Now, the question is whether to invest in Ethereum during its dip. The answer depends on your comfort level with risk. If you are a highly cautious investor, cryptocurrency may not be the best fit for you. The cryptocurrency industry is relatively new, and it is difficult to predict its future five or ten years from now with certainty.
If you are willing to take on some risk, investing in Ethereum could be a wise decision. It has demonstrated its capabilities and has attracted users, indicating that it has a strong chance of leading the pack if cryptocurrency takes off. Additionally, Ethereum is currently addressing its biggest problems, which should make it an even better player in the future.
Regarding the price, Ethereum has dropped significantly from its 2021 peak, with its current price being less than $2,000 compared to over $4,500 at its peak. However, momentum has returned, with Ethereum increasing by 55% since the beginning of the year. Although Ethereum has recently declined by about 10%, it is still a solid long-term investment considering the factors mentioned above. Therefore, buying on the dip is a great idea.
As long as the price is above 1700.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 1823.24
- Take Profit 1: 2000.00
- Take Profit 2: 2100.00
Alternative scenario:
If the level of 1700.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 1700.00
- Take Profit 1: 1600.00
- Take Profit 2: 1500.00
