Ethereum’s price climbed nearly 20% over the last week as the network inches closer to its highly-anticipated software upgrade, which is expected to speed up transactions and make it more energy-efficient.
The second-largest crypto picked up some momentum on Thursday and climbed above $1,900 after developers successfully completed another test on one of its test networks, called Goerli. The test simulated a process identical to what will happen on the main ethereum network in a month.
In July, ethereum’s price soared more than 40% after the network announced a Sept. 19 launch date for the upgrade, also known as “The Merge.” After several delays, experts are waiting to see how investors and companies building their tech on ethereum’s platform respond to the changes.
“Investors are taking note of the ethereum merge due to take place next month, and is being seen as a promising tailwind by the majority despite the risks,” says Marcus Sotiriou, a market analyst at digital asset broker GlobalBlock. “This has resulted in the ethereum options market overtaking bitcoin options.”
Ethereum has been underperforming bitcoin so far in 2022, which experts say could be due to building anticipation for the network’s transition from proof-of-work to proof-of-stake and a broader market retreat from risky assets. The crypto market crashed in June after the Federal Reserve aggressively raised interest rates, crypto companies announced layoffs and froze withdrawals, and the industry continued to face regulatory challenges.
Experts say the crypto market is also reflecting heightened volatility that comes with war, continued surging inflation, and shifting U.S. monetary policy. Experts also point to other factors like the crypto market tracking the stock market, more mainstream adoption, and slumping prices in recent months as contributing to what we’re seeing with crypto prices right now. Government officials have also continued to show an interest in more crypto regulation and even the possibility of creating a government-issued digital currency. Bitcoin’s price has had a similarly rough stretch lately.
All this has made for a shaky start to the year for ethereum. Ethereum’s price has been between $1,500 and $1,900 so far this week. Here’s how ethereum’s current price compares to its daily high point over the past few months:
| One Week Ago (August 4) | One Month Ago (July 12) | 3 Months Ago (May 13) |
|---|---|---|
| $1,621.34 | $1,097.45 | $1,966.70 |
Prices updated: August 11, 2022
After topping $4,100 on Dec. 27, ethereum has ranged between $2,100 and $4,000 in the days since. Despite the slow start to 2022, many experts are still bullish, predicting ethereum’s price could potentially hit and exceed $12,000 this year.
Despite the recent slump, ethereum still had a relatively strong close to 2021. ethereum set a new all-time when it went over $4,850 on Nov. 10, and it carried that strength into December before falling back by the end of the month. Even with the late slump, Ethereum closed the year way over where it was at the start: In January 2021, ethereum’s price was just a little over $1,000.
Like, Ethereum, bitcoin has stalled over the past month as well after its own strong November; bitcoin set a new all-time high when it went over $68,000 on Nov. 10. The future of cryptocurrency is sure to include plenty more volatility in the price of bitcoin and ethereum, and experts’ advice for investors remains the same.
What Should Ethereum Investors Do?
As with any long-term investment, experts advise to ignore the ups and downs. The latest high price doesn’t mean ethereum’s volatility has gone away.
“The real question is, owning these coins, are they going to continue to experience compound, exponential growth? Nothing in the fundamentals of cryptocurrency tells me that answer is yes,” says Jeremy Schnieder, the investing expert behind Personal Finance Club.
Because there’s no guarantee that any crypto’s value will increase, experts advise to never invest more than 5% of your portfolio in cryptocurrency. Never invest at the risk of not meeting other financial goals like paying off high-interest debt or saving for retirement.
If you’ve met all of those benchmarks, the best thing you can do is ignore the hype around new record highs or lows. Like with traditional, long-term investing, the best thing you can do is “set it and forget it,” Humphrey Yang, the personal finance expert behind Humphrey Talks, previously told NextAdvisor.
Read More
Former NextAdvisor reporter Ryan Haar contributed.