ETH, the currency of the Ethereum blockchain, has had a lack of consumer interest and declining prices for some time. Yet in the last week, it bounced back dramatically. We discuss these changes in the article below.
As cryptocurrencies rebounded with news of a temporary reprieve on tariffs, Ethereum was among one of many cryptocurrencies to make large gains. As one of the standout movers, it made back a large amount in a market that has been ambivalent to it for some time. With upgrades to the network due that will make it more competitive, could this signal a shift in the ETH landscape?
Ethereums Current Price Surge
Ethereum moved from $1,500 to $1,585 in the space of an hour this week. These changes were the result of a reprieve in tariffs from the US. In a 24-hour period, it moved up 7.14% taking its market cap to $34.24 billion. The Ethereum price USD at the time of writing stands at $1603 after tailing off a little from a high of $1683.
Bitcoin was also a mover and peaked at just over $83,351. It has since had a slight correction to just under the $82,000 mark. At one point, this was also adding 5% to its value in the space of an hour.
Added to this was the continued spectacular run for XRP. This had a 12% rise in just over an hour, with its market cap reaching $118.19 billion. A host of other coin also saw prices rise when the news broke. This quickly led to a social media furore, with many predicting the start of a cryptocurrency bull run. However, others were quick to point out that we are in one of the most economically volatile periods in the history of crypto, and this was just one more step in the rollercoaster that has been the last 12 months.
Why Is Confidence Down?
A recent sell-off did see it lose the crucial $1,500 level. There are also some indicators that it could fall further before making a recovery. ETH is now trading at a value below the price at which each coin moves on the blockchain. This is the realized price, and when above the spot price, it shows a bearish market. When a currency falls below this, people generally start to lose confidence and sell-off. The last time this happened was in June 2022, and ETH saw a drop of 51%. It then occurred again in November, dropping 35%.
Added to this are that inflows to Spot ETFS still look poor. On April 8th, $3.3 million alone was recorded. This shows a total lack of confidence from institutional investors towards Ethereum. Investment funds using Ethereum have also seen similar issues, with around $37.4 million in the first week of April.
Thirdly, its derivatives markets are also performing poorly. Interest in its outstanding futures and options contracts remains low. There are also negative funding rates in perpetual futures markets.
Is Ethereum a Great Buy?
There is a possibility that the next few months, after this spike, could signal a bearish market for cryptocurrencies. However, this is often the ideal time to stock up. Having been overlooked for some time, there are factors that suggest Ethereum may be a great choice. Priced around 50% lower than it was 12 months ago, this could even drop further if a bear market is to occur.
Aside from other factors, the overriding issue with Ethereum is scaling. It has faster transactions and lower gas fees than before but has not made enough improvements to attract more users. It is still more expensive than many of its rivals.
Its upcoming updates must solve this, in which case the price will surely push further. In a competitive field, it is still the second-largest blockchain in the world. It has a market cap of $195 billion. With upgrades, this would surely put a dampener on those who were positioning themselves to take its crown. Why would people go anywhere else, when Ethereum can fund bigger and better projects at the same cost and speed?
Has Ethereum Hit Its Bottom?
It is quite possible that Ethereum has already hit its bottom, or is nearing it. It has already dropped below $1,500 marking a two-year low and has had a 64% decline from its cycle peak of $4,000. However, these periods have always been followed by strong recoveries. Similar market rebounds occurred in 2018 and 2020 when data was almost identical.
This still has not attracted institutional interest, with outflows in ETH ETF products continuing. However, with the volatile economic climate, it could be overlooked as people clamber to put money into less risky assets. If so, that could make Ethereum one of the best buys on the market. Should the upgrades solve issues of scalability, the Ethereum bounce back could inevitably be for good.