Ethereum blockchain is a key driver of the crypto economy, hosting thousands of other tokens, smart contracts and apps. This blockchain incentivized innovation that led to the creation of Decentralized Finance (DeFi) as well as Non-fungible tokens (NFTs). In the parallel world, it is similar to the Google Play store though it is decentralized unlike the former. Ethereum coin with the ticker ETH is currently the second-largest cryptocurrency by market capitalization. In this weekly market tracker, we analyse the performance of Ethereum and its potential leading into 2022.
ETH is trading in the range of $3,400 today per coin with a market cap of nearly $400 billion. It enjoys more than 18 per cent share of total crypto market cap compared to Bitcoinâ€™s (BTC) 44 per cent. In comparison, the number three crypto today has a mere 3 per cent share of total market. Therefore, ETH along with BTC, are the key pillars of the crypto economy and their price actions determine the market action.
Though ETH has an unlimited supply of coins unlike BTCâ€™s 21 million, it is rate controlled by mining potential as well as a recent update that burns some of the existing supply daily. This update leads into something known as Ethereum 2.0 â€“ where supply is constantly reduced along with a migration of the platform to a proof-of-stake (PoS) algorithm that makes the blockchain more scalable with lower transaction fees. This update is expected to happen in early 2022 and will drive ETHâ€™s price sentiment into the bullish zone.
Short-term Technical Analysis
ETH is currently trading above strong support levels such as $3,300 (its 50-day moving average), $3,200 and $3,150 (its Fibonacci retracements). This essentially means that on the event of a drop in price, there will be large buy orders at these prices that will ensure a bounce back. These support levels therefore may present good buying opportunities for investors.
Source: TradingView, Binance
On the upside, ETH is likely to find resistance at $3,650 and $3,530 - both levels where it previously faced rejection recently and dropped down. Overall, in the short term, Q4 2021 will likely be a strong consolidation phase for ETH with a strong rally expected in Q1 2022.
What to expect in the long term?
ETH started 2021 with a price of $750 per coin and reached an all-time-high of $4,400 in May before it crashed along with BTC. Many followers of ETH expect the cryptocurrency to hit $10,000 in the next one year â€“ a 3x from today â€“ as Ethereum 2.0 update happens.
Flippening & Competitors
Some analysts expect ETH to overtake BTC in market cap over the next few years â€“ an event known as flippening. However, there is a long road ahead since all institutional inflows are first focussed on BTC as a better store of value. ETH also faces strong competition in the DeFi space with Cardano, Solana and Polkadot growing into the top 10 list this year.
This article was authored by Giottus Cryptocurrency Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.