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Why the altcoin price dropped to $ 3 thousand and what will help the coin not only recover, but also move on to updating historical highs in the next 12 months
Prominent trader Peter Brandt warned that Ethereum has broken through two important support levels and entered a bearish phase. According to the analyst, altcoin will continue to fall in the near future. RBC-Crypto experts explained what is happening with Ethereum and what to expect from the coin in the near future.
Ethereum has indeed broken through important support levels, agreed Mikhail Karkhalev, financial analyst at Currency.com crypto exchange. According to him, this could reverse the upward trend. However, while the asset continues to hold the $ 3,000 mark, there is still a chance of recovery, the analyst added.
“In 2021, Ethereum showed much higher volatility and growth dynamics in general than Bitcoin, respectively, falls and corrections are also reflected on it more than on the first cryptocurrency,” Karkhalev explained.
When the altcoin enters the “bearish” phase, its value may drop below $ 2 thousand, the analyst predicted. In his opinion, this decline will be a good opportunity to buy the asset.
Prospects for altcoin
The current decline in altcoin is due to the normal market nature, said lead analyst at 8848 Invest Viktor Pershikov. Now there is a price correction after a significant increase in the last year, and it is incorrect to call the current movement of the asset a “bearish” phase, the analyst says.
According to Pershikov, in 2022 Ethereum can become a good investment, since it can rise in price to $ 5-6 by the end of the year (66-100% from current levels).
“Despite the risks of a drawdown to $ 2.5 thousand, I regard the current levels as optimal for buying Ethereum and long-term growth expectations against the backdrop of a technological and fundamental improvement in the protocol,” the analyst explained.
Crypto market participants expect that in 2022 the Ethereum blockchain will complete the transformation and get as close as possible to protocol 2.0, says the co-founder of Crypterium Vladimir Gorbunov. In his opinion, if altcoin developers manage to reduce the cost of transactions this year, then the Ethereum rate may rush to $ 10 thousand and even higher.
One of the most negative points that puts pressure on the price of Ethereum is the high cost of launching new projects on the blockchain and the complexity of this process, Gorbunov explained. He believes that these disadvantages of the largest altcoin in terms of capitalization are used by competitors who entice users with low commissions and simpler tools to launch their own projects.
“Because of these factors, right now is not the best time for Ethereum. In the short term, it will either repeat the dynamics of bitcoin, or gradually decline, “the expert added.
In early January, Ethereum co-founder Vitalik Buterin announced that the full implementation of the altcoin roadmap would take about six years. According to Buterin, Ethereum is currently 50% complete. This year, this figure is planned to be increased to 80%, the developer said. According to him, in 2022 major updates will be implemented called merger (the transition of altcoin to the Proof-of-Stake (PoS) consensus algorithm and sharding (increasing the scalability of the blockchain).
At the moment, the Ethereum blockchain is working on the Proof-of-Work (PoW) consensus algorithm. The main difference between PoS and PoW is that miners are not needed to keep the PoS network running. The health of the blockchain is ensured by the holders of digital coins and are rewarded for this. This process is called staking.
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