Assets, Ethereum

Will Ethereum Keep Crashing?

Ethereum, the world’s second-largest cryptocurrency by market value, has been on a tear over the past month.

The price of ether, the native token of the Ethereum network, surged to an all-time high of $3,451.49 on January 10, according to data from CoinMarketCap.

The cryptocurrency has since pulled back slightly and was trading at $2,972.59 at press time.

The rally comes as Ethereum’s DeFi (decentralized finance) sector continues to grow at a rapid pace. The total value locked in Ethereum DeFi protocols has surged from $1 billion to $13 billion since June 2020, according to DeFi Pulse.

The surge in price and DeFi growth has led some industry observers to speculate that Ethereum is in the midst of a “flippening” event, whereby it overtakes Bitcoin as the world’s largest cryptocurrency by market value.

However, not everyone is convinced that Ethereum can sustain its current momentum. In fact, some analysts believe that the cryptocurrency is due for a major correction and could even crash back down to its 2018 lows.

Here’s a look at some of the factors that could cause Ethereum’s price to drop in the near future.

Excessive speculation

One of the biggest dangers facing any rally in asset prices is excessive speculation. And it looks like that may be happening in the case of Ethereum.

NOTE: WARNING: Ethereum has experienced significant volatility over the past few months, with dramatic price swings. While some analysts have predicted that Ethereum will eventually rebound and increase in value, it is impossible to accurately predict the future of this cryptocurrency. Investing in Ethereum carries a high degree of risk and may not be suitable for all investors. Before investing, consider your financial objectives, risk tolerance, and knowledge of cryptocurrency markets.

According to data from Santiment, a blockchain analytics firm, there has been a sharp increase in the number of new addresses created on the Ethereum network over the past few months. This is often taken as a sign that more people are buying ETH in anticipation of further price gains.

Similarly, data from Glassnode shows that the percentage of ETH held in so-called “whale” wallets (i.e., wallets holding more than 1,000 ETH) has reached an all-time high of 36%.

This suggests that a small group of investors are amassing large amounts of ETH and could potentially sell their holdings and trigger a sharp price decline.

High gas fees

Another potential problem for Ethereum is high gas fees. Gas fees are paid by users to miners in order to process transactions on the network.

And they have been rising sharply over the past few months as demand for space on the blockchain has increased.

According to data from Bitinfocharts, the average gas fee on Ethereum hit an all-time high of nearly $23 per transaction on January 13. This is becoming increasingly prohibitive for smaller investors and could lead to a exodus from the network.

Conclusion: Only time will tell if Ethereum will keep crashing or if it will continue to rise in value; however, there are certainly some potential problems that could cause its price to drop sharply in the near future.

7 Related Question Answers Found

Is Ethereum Likely to Crash?

In recent months, Ethereum has seen a tremendous amount of growth. This has led some to believe that Ethereum is due for a crash. However, there are several reasons why this is unlikely to happen.

Is Ethereum Predicted to Go Up or Down?

It’s no secret that Ethereum has had a tough year. The second-largest cryptocurrency by market capitalization is down over 80% from its all-time high in January 2018. But could things be turning around for ETH?

Will Ethereum Go Back Up?

Ethereum, the world’s second-largest cryptocurrency by market value, is down more than 70% from its all-time high in January. The sell-off has been driven by a variety of factors, including concerns about the issues with the ethereum network’s scalability, regulation, and competition from other cryptocurrencies. Investors are also worried about the possibility of a hard fork of the ethereum network, which could split the cryptocurrency into two separate assets.

Is Ethereum Falling?

The value of Ethereum has been on a steady decline since early 2018. This has caused many to wonder if Ethereum is falling. The main reason for the decline in Ethereum’s value is the increase in competition from other cryptocurrencies.

Will Ethereum Rebound?

When it comes to Ethereum, the question on everyone’s mind is whether or not the platform will rebound after a string of bad news. From the Parity hack to the DAO disaster, it’s been a tough year for Ethereum. But despite all of the negativity, there are still plenty of reasons to be bullish on Ethereum in the long run.

Will Ethereum Recover?

When it comes to Ethereum, the question on many peoples’ minds is will Ethereum recover? The simple answer is yes. Ethereum, like any other cryptocurrency, is subject to market fluctuations.

Is Ethereum Going to Be Deflationary?

The word “deflationary” is often used to describe Ethereum. But what does it mean? In general, deflation is when the price of goods and services goes down over time.
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