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It’s Back Above $3,000 for Ethereum. That Has Implications for Investing

Following a rally that began late last week and continued through the weekend and into this week, the price of Ethereum has risen beyond $3,000 once again. Ethereum was trading little under $3,200 in the early hours of Wednesday morning.

After being locked below $3,000 since January 20 before last Friday’s spike, Ethereum’s price dropped to below $2,200 on January 24, the lowest it had been since July 2021. Ethereum’s price has been stalled below $3,000 since January 20.

Despite the fact that it appears to be on the increase again, the trailing price came as a result of a recent announcement by Federal Reserve Chairman Jerome Powell that the Fed will most likely begin raising interest rates in March in order to combat sustained rising inflationary pressures.

More broadly, the sharp decline in the price of Ethereum in January — as well as the sharp decline in the price of Bitcoin — came amid the stock market’s worst month since March 2020, and shortly after the release of the Federal Reserve’s long-awaited report on the possibility of a federally issued digital currency.

According to Grant Maddox, a certified financial adviser located in South Carolina, investors are giving their portfolios a thorough examination in light of current market conditions. “At the present, many investors are reducing the amount of risk in their portfolios. “It’s possible that we’re entering a new market cycle,” Maddox told us last week.

This week, the price of Ethereum has fluctuated between $3,000 and $3,200. In the following chart, you can see how the current price of Ethereum compares to its daily high point during the last few months:

Ethereum and Bitcoin have experienced significant drops in recent weeks as a result of continued high inflation, a disappointing December jobs report, and continued signals from the Federal Reserve that the central bank would begin to scale back measures to support the economy as the economy continues to improve.

Since reaching a high of $4,100 on December 27, Ethereum has fluctuated between $2,100 and $4,000 in the following days. While the year 2022 is off to a sluggish start, many experts remain optimistic, forecasting that Ethereum’s price will likely reach and beyond $12,000 this year.

Ethereum

Despite the recent downturn, Ethereum still had a very great performance in the run-up to the year 2021. In November, Ethereum reached a new all-time high of $4,850, and it maintained that level into December before reversing course at the end of the month. Despite the late collapse, Ethereum’s price ended the year more than double what it had been at the beginning of the year: in January 2021, Ethereum’s price was only a bit over $1,000.

New economic uncertainty stemming from the Omicron COVID-19 variant, new comments made by Federal Reserve Chairman Jerome Powell about the health of the economy, and ongoing comments made by U.S. policymakers such as SEC Chairman Gary Gensler about cryptocurrency regulation have all contributed to the continued volatility and price declines in the cryptocurrency market.

Bitcoin, like Ethereum, has been stagnant over the past month, despite having had a good November of its own. Bitcoin reached a new all-time high on November 10 when it crossed the $68,000 mark. In the future of cryptocurrency, there will almost certainly be even greater volatility in the prices of Bitcoin and Ethereum, and the advice of experts for investors will stay the same.

What Can Ethereum Investors Expect?

Experts advise ignoring the ups and downs of the market as they would with any long-term investment. The recent price increase does not imply that Ethereum’s volatility has been eliminated.

“The fundamental question is whether or not those who own these coins will continue to benefit from the compound and exponential growth. Jeremy Schnieder, the financial expert at Personal Finance Club, says that nothing in the fundamentals of cryptocurrencies indicates that the answer is yes.

Because there is no certainty that the value of any cryptocurrency will improve, experts recommend that you never invest more than 5 percent of your portfolio in cryptocurrencies. Investing should never be done at the expense of other financial goals, such as paying off high-interest debt or preparing for retirement.

If you’ve achieved all of these goals, the greatest thing you can do is ignore the excitement around new highs or lows that set new records. As with traditional long-term investing, the best thing to do is “set it and forget it,” according to Humphrey Yang, the personal finance guru at Humphrey Talks, who previously spoke to NextAdvisor about the subject.

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