The crypto financial market began to experience a gain in price and more rise in adoption sequel to the Q1 of 2023, after over 12 months of a sustained bearish market. Bitcoin, the premier coin of the crypto market, hits a rock-bottom price of $15,599.05 as of Q4 of 2022. The times are really crazy, and guess what? It’s just about to get crazier with this discovery.
Ethereum, a leading blockchain and crypto coin on decentralisation has seen several solutions deployed within and atop it. From in-house EIPs (Ethereum Improvement Proposals) to other layers built as an extension network/blockchain, the Ethereum ecosystem is being up and doing in recent times, and yes there seems to be some pattern it wants to take after.
The patterns, potential possibilities for the Ethereum ecosystem, and its price action projections are carefully trapped under the subheadings below and would form a clear conclusion at the closure of this article. Enjoy!
The Hiking Fed Rates
The federal reserve has not ceased to raise interest rates with the advent of the post-covid supplies. In 2022 alone, it raised interest rates seven times, and there was an obvious disruption experienced in the finance world bank collapse, loss of investment interest in traditional sectors, and a continuous increase in household commodities. On the other hand, the entire crypto market was on a decline in 2022, but from December last year, the Fed seems to have lost its grip on the market, Ethereum inclusive.
The 2023 Fed’s projection poses a potential top on the rate at a peak of 5.1% following the happenings that played out from late last year to the Q1 of 2023. In the face of these, Ethereum and other crypto assets have daunted the Fed’s rates and have risen over 70% in Q1 alone.
Technical Analysis from the DXY Index
The DXY is the US Dollar index weighted as the trading strength of the United States Dollar in the foreign exchange market. It is used as a trading standard and measuring metric to evaluate the USD amid baskets of currency pairs traded globally.
Fig a: DXY Chart.
Fig b: ETHUSDT Chart.
Above is a technically analysed chart on DXY and ETH/USDT on TradingView. This comparative analysis shows that a rise in DXY equals a fall in Ethereum (And of course the crypto market), and a consolidation/side movement equals a resultant rise in the general crypto market. For the past 12+ months, DXY has been on the increase while Ether (And other cryptos) has been down.
The recent drop in DXY hints at two things; The potential resumption of an uptrend in Ethereum, or the possibility of a retracement.
Layers 2s and Ecosystems with Valuable Solutions
Layer-2 protocols have been making rounds around the Ethereum blockchain for a while. From last year, there was optimism ($OP), and most recently is Arbitrum and salient hypes around StarkNet. These protocols are deploying the scalability solution needed for Ethereum to gain more mainstream traction. As a result of these solutions fostering more utility on the Ethereum Layer-1 (POS) chain, investors, contributors, and several communities have been built atop and around the Ethereum blockchain– directly or indirectly.
Ethereum’s Upgrades & L2s Implication on Ethereum
Ethereum had a major upgrade in Q4 of 2022, where it switched from its previous proof of work consensus to the proof of stake consensus– an upgrade known as the merge. After this, it experienced another upgrade (Shapellah and Shanghai) with others lined up in its roadmap. These upgrades on the Ethereum blockchain have contributed to the Ethereum price action leading its price to the upside.
The implication of the solutions on boarded by Layer 2 onto the Ethereum Layer 1 chain is the inclusivity of more liquidity, utility, and investments into the token thus potentially driving its price upward.
It’s been a deep report on the prospects trailing Ethereum’s price actions. All indication on Ethereum seems to simply point to its potential Bullish formation and it still lies unsure. With investors turning towards Hong Kong as the hub for crypto firms, Bitcoin (Ether and crypto holding the forming alliance against the Fed rates), and new investments made into blockchain and surrounding Tech, it’s becoming safe to subjectively conclude that Ethereum’s target is to smash new all-time high beyond $5000 and of course, more highs.The days ahead are really going to get bumpy, smooth, and exciting– all sorts of emotions, but in the long term, the king of decentralisation will hit a new all-time high before Q4 2025– a claim by major financial analysts.
Frequently Asked Questions
Would Ethereum Touch Key-Lows Before ATH?
Ethereum’s price action can potentially trade into a consolidatory range where certain lows can be touched without breaching its seemingly new uptrend direction.
Due to the crypto market’s volatility, there is also a rare possibility for Ethereum to break back into the triangle-pattern zone and reclaim new lows (Such as $800).
Would the Price of ETH Affect the Crypto Market?
Either in a bull or a bear market, a drop in price or a rise in the same on Ethereum will affect the market. Holding the second position on coinmarketcap and coingecko, Ethereum has the second largest liquidity in a 24-hr trading volume of over $11 billion and a market cap of about $230 billion.
What Is the Impact of ETH’s ATH on NFTs and DeFi?
The previous bull run between 2020 and 2021 gave a clue into the extensive impact Ethereum’s all-time high would have on NFTs and DeFi in the coming days. Among other factors listed here, is the Beeple Arts NFT recording the single largest NFT by volume traded on the Ethereum blockchain Network in 2021.
Non-fungible tokens and the whole features embedded in DeFi are not only going to give more explosive returns of investment to early investors but would resume a new rise in adoption rate, enable the engaging utilisation of these arts, and more evolution of use-cases as well as security (or upgraded feature) within DeFi.