- ETHUSD is down 40%
- The Ethereum blockchain maintains the competitive edge.
- Ethereum solid long-term prospects.
Ethereum has always been one of the best investments to hold in the burgeoning cryptocurrency space as the world’s largest programmable blockchain. Its native token has skyrocketed in recent years to record highs. However, it has come under pressure shedding more than 40% in market value in the recent past.
ETHUSD technical analysis
The 40% pullback has coincided with the broader market sell-off and risk-off mood amid geopolitical tension and monetary policy uncertainties worldwide. However, ETHUSD appears to have hit bottom in recent weeks, with the $2,500 level emerging as a crucial support level.
Short sellers have struggled to push the pair lower, facing strong opposition from buyers. A build-up in buying pressure after the steep pull back all but affirm suggestions of a looming bounce back. However, bulls will have to steer a rally above the $2,800 to affirm the bounce back, given the long-running downtrend.
A sell-off followed by a close below the $2,500 support level could give short sellers a reason to continue piling pressure, something that could see ETHUSD plunging to lows of $1980 area. On the flip side, a rally followed by a close above the $3,000 level would reignite a surge to all-time highs near the $4,800 area.
Ethereum blockchain edge
Looking ahead, the prospect of Ethereum bouncing back to all-time highs is very high as it plays host to one of the most popular and commonly used blockchains in powering decentralized finance systems. DeFi Systems are becoming increasingly popular as a shift from centralized systems in the financial sector gathers systems.
In addition, a majority of the marketplaces for non-fungible tokens are powered by Ethereum blockchains. As the race to tokenize real-world objects hits up, Ether demand continues to surge, a move that should also result in significant price appreciation. The NFT market has grown to a $41 billion marketplace of which Ethereum blockchain is at the heart of the growth.
In addition, Ethereum is one of the best investments for anyone eyeing exposure in the cryptocurrency sector partly because it is the largest platform powering decentralized applications and smart contracts. This space commands a solid competitive edge compared to other blockchains, including Cardano and Solana.
Ethereum protocol upgrade
While the Ethereum blockchain has been accused of slow transaction speeds given its reliance on proof of work mechanisms, the same is poised to change. The Ethereum team is working on a proof of stake protocol that could allow the blockchain to handle more than 14 transactions it currently handles a second.
An increase in the number of transactions it handles should result in a significant increase in transactions on the network, which should fuel strong demand for the Ether coin. The net effect would be significant ether price appreciation.
Ethereum has a lot of things going for it despite losing more than 40% in market value in recent months. An upgrade to proof of stake protocol would be a game-changer in enhancing the blockchain capability to handle and process more transactions a second.
In addition, its growing popularity around decentralized applications and Decentralized Finance is another important aspect that affirms its growing use case expected to enhance Ether value going forward.
Increased crypto adoption and investment from institutional investors is another important aspect that affirms Ethereum’s long-term prospects. That said, the crypto looks to be trading at a discount going by the solid underlying fundamentals. The 40% pullback might have presented an opportunity to buy the coin on the dip as its long-term prospect remains solid.