The Ethereum market got hammered again on Friday, reaching down towards the $3100 level. As Bitcoin goes, so goes the rest of the crypto world, so it is not a huge surprise to see that Ethereum continues to melt down. It has been about a 16% drop for the week, but now we are approaching a significant support level, in the form of the $3000 level. The $3000 level has a lot of psychology attached to it, so I do think that it will attract a certain amount of money and momentum.
By falling the way we have, Ethereum is down significantly from the highs, and sooner or later we are going to start to see value hunters coming back in. I am a longer-term holder of Ethereum, so I look at this as a bit of a gap. With Ethereum 2.0 coming out next year, it does make a certain amount of sense that we should see quite a bit of excitement around the ecosystem, as gas fees are set to be drastically lower than they are currently. Furthermore, transaction speed should go through the roof, which is another complaint about the Ethereum ecosystem.
A lot of this will also come down to layer 2 coins, as the Ethereum ecosystem is what most of them sit on top of currently. In other words, when you are buying Ethereum, you are buying the “nuts and bolts” of the blockchain world, and therefore it is more or less a general bet on blockchain itself. That being said, with the Federal Reserve recently talking about raising interest rates at least three times this year, it has a lot of risk appetite coming out of the markets, which is very negative for crypto itself. Crypto is about as speculative as they get, so we will continue to see these massive swings, which is part of the appeal, even though the swings sometimes go lower like we have seen over the last couple of months. Because of this, I think it is only a matter of time before we see value hunters come back in, and this is a relatively perfect level for that to start happening. Regardless, I would not jump in with a lot of money in one shot and would suggest that perhaps taking your time is the best way going forward.
