Will Ethereum Recover? Here’s What Will Help ETH Go Up Again

Ethereum, the world’s number one altcoin, underwent a rollercoaster ride in terms of its prices over the last two years. Since its all-time high price of $4,891 in November 2021, a period that saw Bitcoin and all major altcoins experience a particularly strong bull run, the price of ETH has mostly fluctuated. With the token currently trading at less than $2,000, ETH is clearly struggling to hit its once-heady heights. Nevertheless, market speculation indicates that ETH’s value might be on the rise sooner rather than later. 

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The Role of the Merge

As a DeFi-based blockchain, Ethereum is more than a network facilitating crypto transactions. Developers and other users rely on Ethereum’s decentralised blockchain to build dApps and carry out a host of other activities, such as minting NFTs. As Ethereum is such a congested blockchain, it is understandable that the network lags in speed. Therefore, upgrading and optimising the network to function better for users became necessary. The result was the so-called Merge, a massive upgrade in the network’s operating mechanisms, most notably the switch from a Proof-of-Work to a Proof-of-Stake consensus mechanism. Market speculation around the Merge and increased investor enthusiasm played a major role in briefly causing ETH’s price to spike in late 2022.

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Post-Merge Price Fluctuations

The ETH bull run leading up to the Merge was rather impressive, particularly given the predominant downward market trend at the time. Instead of resulting in a price crash due to anticipated selling pressure, ETH experienced the opposite, with a price rally seeing the token hit about $2,100. Nevertheless, the token’s price plunged to about half of that amount in light of the market-wide crash that followed FTX’s bankruptcy. Subsequent proposals for a change in the blockchain’s protocols saw the Ethereum network approve the execution of a hard fork codenamed “Shanghai”, which went live in April 2023. All the while, ETH’s price fluctuated, trading at about $1,207 in early January, slightly spiking to about $1,732 in February 2023.

What Will Help ETH Go Up Again?

Despite the apparent price slump, Ethereum is nevertheless poised to rally strongly again. Here’s why:

The Effect of the Merge

Ethereum’s switch to a faster, more energy-efficient consensus mechanism has boosted its appeal among various users, especially environment-conscious users. As a result, it is seen not just as a secure digital asset but as a symbol of sustainability.

Ethereum Is the Hub for Smart Contract Technology

Another reason why ETH is poised to go up again is because the blockchain has firm footholds in the decentralised finance sector. Ethereum pioneered DeFi technology, which makes it possible to develop the smart contracts that power thousands of dApps. All the signs are there that ETH’s current price slump is only temporary and will rally back stronger than ever.

Reduced Token Issuance

Ethereum’s transition from a Proof-of-Work to a Proof-of-Stake-based protocol did more than just speed up the network. It also makes the token more appealing to investors. This is because the new PoS consensus mechanism requires issuing fewer ETH tokens for sustenance. The result is deflationary pressure on token supplies, which can boost the cryptocurrency’s long-term value and price stability.

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Conclusion

Ethereum has managed to hold on to its place as the second-largest cryptocurrency by market cap (Second only to Bitcoin), not just for its market price. Unlike many altcoins that are solely a digital currency, Ethereum has true utility. While it may be experiencing temporary price slumps, all the indicators point to a price rally sometime shortly.

Frequently Asked Questions

What Is Ethereum?

Ethereum is the name of a popular decentralised blockchain with ETH (Ether) as its native token. The network is popular for smart contracts, dApps and NFT minting.

What Powers the Ethereum Blockchain?

The two most significant components of the Ethereum blockchain are its Proof-of-Stake consensus mechanism that lets users earn passive income on tokens staked into the network and the Ethereum Virtual Machine that executes smart contracts.

What Contributes to the Volatility of Ethereum Price?

The factors that affect ETH price volatility are not exclusive, as they apply to all cryptocurrencies. Some of these factors include market speculation, government regulation, supply, demand, and competition.