Will Ethereum Hit $8,000 In 2022?
Despite the new inflationary reports which have witnessed a price hike of 7%, the highest in over 40 years, the big cryptocurrencies have begun their rebound towards the end of February. While Bitcoin is once again trading above $40,000 after being stuck around the $35K mark for most of this year, are we witnessing a major price reversal in the biggest altcoin, Ethereum as well? Let’s take a look at what the second-largest cryptocurrency in the world has in store for the following year.
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Ethereum’s recent price history
After being released in 2015 by Vitalik Buterin, Ethereum’s native token, Ether has soared to become the second-largest cryptocurrency in terms of market cap. The last 1 year has been sensational for the token, as it has risen from lows of $975 during the beginning of 2021 to trading as high as $4,800 during the end of last year. Ethereum fell back to a price of $2,200 during the beginning of 2021, but despite the fall, it has still shown a price growth of 707,000% since its initial release.
The blockchain-based network has proved to be a threat to even Bitcoin, standing out due to its software network that integrates the tech world and calls for more decentralisation in financing, music, gaming and entertainment. This is one of the reasons why it’s shown such a strong reversal, already trading at the $3K mark, a 30% price increase from its initial drop in 2022, according to Coinmarketcap.
With the price of cryptocurrencies and Ethereum slowly showing a strong reversal, two conflicting reports show the volatility still involved in this market.
Traders still not leveraging Ethereum after it hits $3K
During the last week of February, derivatives data according to CoinTelegraph showed that investors were still cautious about Ethereum trading. This was despite a 20% price jump on February 22, which pushed the price close to the $3K mark.
One of the main reasons for this is the uncertainty in the high gas prices. Ethereum has always been questioned due to the high gas fees during transactions and low throughput of activity, which has allowed many alternative tokens such as Solana, ADA and Polygon’s MATIC to become popular among app developers using blockchain technology.
With the upcoming Eth 2.0 network update still being uncertain, investors are unsure about the future of Ethereum. This is why the network value locked in smart contracts on the Ethereum network has decreased by 25% between January to the end of February.
Source: Trading View
The above chart shows that the options trading or leverage traders in the Ether market have been bearish since the beginning of February, which is why Ethereum has failed to maintain a price over $3,000. Despite the mini bull-run that the Ether token is enjoying, the current lack of leverage trading may also be a result of the uncertain political climate due to the ongoing European tensions in Ukraine.
But one of the biggest deterrents to Ethereum’s success has slowly started noticing a reversal as well, as the gas fees are lowering month by month.
Ethereum’s gas fees fall by 73%
The average transaction fees have hit a 4-month low for Ethereum, as they are down to just $14.17 as compared to $53 in January. While this is a huge bonus for the network, it is also worth noting that Ethereum still has a much higher gas fee than its closest competitors. Solana’s transaction fees cost just a few cents, while it can handle almost 75,000 transactions per second. In comparison, Ethereum can handle a few hundred transactions at the same time.
Ethereum is also witnessing a dwindling DeFi market dominance, which has fallen to 70%, as compared to the 100% market size it had before the other altcoins entered the market.
But all the major problems related to Ethereum will most likely be solved with ETH 2.0, which is expected to be released during the middle of the year. With experts expecting this upgrade to go through, some are predicting a massive rise in the price of Eth.
Ethereum to $6,500 — $8,000
One of the popular cryptocurrency news outlets, Coinpedia, predicts that the token has the possibility to reach levels between $6,500 to $8,000 during 2022. If the bullish momentum continues for Ethereum, it can break the previous all-time-highs of $4,800. The time to follow the token closely would be around June-July when the Eth 2.0 upgrade is set to be approved. This network update may be the main factor in deciding the upwards or downwards movement of Ethereum for the rest of the year.
Popular cryptocurrency news breaker, Lark Davis tweeting about the proof of stake update expected to come with Eth 2.0.
If the upgrade is actually successful, it may be a matter of ‘when’ rather than ‘if’ Ethereum can break the all-time high prices. But we are still a long way from seeing this being set in stone. Acquiring more Ethereum at these levels may be a sensible bet if you are willing to take on some risk, but remember to check with your financial advisors, since this is not financial advice. Also, make sure to do your own prior research before investing and only put in what you can afford to lose.