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Analysis

A significant drop in demand puts Ethereum in dire straits

February 15, 2022 - Around 3 mins mins to read

Macro factors have weighed on the performance of crypto assets, including Ethereum.

Ether is down nearly 5% over the past week, slipping to the $3,000 mark. The asset has lost nearly 40% of its value since hitting its all-time high in November, forcing many analysts to reconsider their previous optimistic view.

Ethereum in dire straits

ETH price chart | Source: TradingView

As a matter of fact, report Finder.com’s latest Ethereum price prediction is “very negative.” Curiously, analysts have significantly lowered their price expectations compared to previous forecasts. The October report predicted that ETH would hit $5,144 by the end of 2021. However, at the time of the second survey in January, the results showed that ETH was much lower than this price zone.

Analysts are now expecting a year-end price of $6,500 for Ethereum, with $10,810 set as a target for 2025 and $26,338 for 2030.

“The prediction of what value Ethereum can reach in 2030 has fallen sharply compared to before. The positive outlook for price growth in the crypto market will be heavily impacted by tightening international regulations and a declining market value in early 2022.”

For example, CoinFlip founder Daniel Polotsky predicts that ETH price will only reach $4,000 by the end of 2022. Mainly due to the strong performance of the competitors. It should also be noted that the current usefulness of ETH depends on the success of layer 2 solutions like Polygon, which Daniel believes will derive most of their value from ETH. This outlook is based on the price appreciation of both assets over the past year. MATIC price has gained around 1,394 percent during that time, compared to ETH’s modest 62 percent gain.

Polygon has become an integral part of the Ethereum ecosystem in 2021. MATIC has started to develop on its own and analysts fear it could compete with ETH in the future.

Ethereum’s high transaction fees have recently come down. In fact, on February 13, fees hit their lowest level since last July. According to Santiment, this drop in fees is due to the fact that ETH has had a poor performance recently, and also due to a drop in demand for ETH transactions.

Similarly, a significant drop in the number of whales holding tokens was also noted, suggesting they may exit the network. Addresses with more than 1,000 ETH have hit their lowest level since 2018. This shows that the current price decline is accompanied by whale dumping.

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Author

Annie

Championing positive change through finance, I've dedicated over eight years to sustainability and environmental journalism. My passion lies in uncovering companies that make a real difference in the world and guiding investors towards them. My expertise lies in navigating the world of sustainable investing, analyzing ESG (Environmental, Social, and Governance) criteria, and exploring the exciting field of impact investing. "Invest in a better future," I often say. That's the driving force behind my work at Coincu – to empower readers with knowledge and insights to make investment decisions that create a positive impact.
Analysis

A significant drop in demand puts Ethereum in dire straits

Macro factors have weighed on the performance of crypto assets, including Ethereum.

Ether is down nearly 5% over the past week, slipping to the $3,000 mark. The asset has lost nearly 40% of its value since hitting its all-time high in November, forcing many analysts to reconsider their previous optimistic view.

Ethereum in dire straits

ETH price chart | Source: TradingView

As a matter of fact, report Finder.com’s latest Ethereum price prediction is “very negative.” Curiously, analysts have significantly lowered their price expectations compared to previous forecasts. The October report predicted that ETH would hit $5,144 by the end of 2021. However, at the time of the second survey in January, the results showed that ETH was much lower than this price zone.

Analysts are now expecting a year-end price of $6,500 for Ethereum, with $10,810 set as a target for 2025 and $26,338 for 2030.

“The prediction of what value Ethereum can reach in 2030 has fallen sharply compared to before. The positive outlook for price growth in the crypto market will be heavily impacted by tightening international regulations and a declining market value in early 2022.”

For example, CoinFlip founder Daniel Polotsky predicts that ETH price will only reach $4,000 by the end of 2022. Mainly due to the strong performance of the competitors. It should also be noted that the current usefulness of ETH depends on the success of layer 2 solutions like Polygon, which Daniel believes will derive most of their value from ETH. This outlook is based on the price appreciation of both assets over the past year. MATIC price has gained around 1,394 percent during that time, compared to ETH’s modest 62 percent gain.

Polygon has become an integral part of the Ethereum ecosystem in 2021. MATIC has started to develop on its own and analysts fear it could compete with ETH in the future.

Ethereum’s high transaction fees have recently come down. In fact, on February 13, fees hit their lowest level since last July. According to Santiment, this drop in fees is due to the fact that ETH has had a poor performance recently, and also due to a drop in demand for ETH transactions.

Similarly, a significant drop in the number of whales holding tokens was also noted, suggesting they may exit the network. Addresses with more than 1,000 ETH have hit their lowest level since 2018. This shows that the current price decline is accompanied by whale dumping.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page