Analysts predict this for Ethereum as demand drops significantly
Macro factors have been pressing hard on cryptocurrency assets’ ability to perform. Thus, leading to a cascading effect on their prices. For instance, the second-largest cryptocurrency Ether fell almost 5% over the past week and slid down the $3,000 mark. The asset has lost almost 40% of its value since reaching an all-time high in November. Thereby, forcing many analysts to rethink the bullish perspective they had held earlier.
In fact, Finder.com’s most recent Ethereum price prediction report “is far more bearish.” Curiously, the analysts have significantly lowered their price expectations when compared to the previous predictions. Interestingly, the October report had predicted ETH to hit $5,144 by the end of 2021. However, at the time of the second survey in January, ETH was far below that price point.
The analysts now expect an end-of-year price of $6,500 for ETH, with $10,810 set as the target for 2025 and $26,338 for 2030. The report further read,
“The panel’s prediction of the value Ethereum may reach by 2030 has been dialled back significantly. The positive outlook for price growth in the cryptocurrency market was heavily affected by increasingly tightening international regulations and tumbling current values in early 2022.”
CoinFlip founder Daniel Polotsky, for instance, thinks ETH price will reach only $4000 by 2022 end. Primarily, because of its competitors’ rich performance. Also to be noted, ETH’s current utility is dependent on the success of Layer 2 solutions such as Polygon, which Daniel believes will rake in much of the value from ETH. This outlook can be given some credence by looking at the price appreciation of both assets in the past year. Polygon’s MATIC rose about 1394% during this time, compared to ETH’s modest 62% gains.
Polygon has become an integral part of Ethereum’s ecosystem in 2021. MATIC has started to branch out on its own, and analysts are worried it could pose competition to ETH going forward.
Ethereum’s high transaction fee has gone down recently. In fact, on 13 February, it touched its lowest level since July last year. Albeit, for all the negative reasons. According to Santiment, this fall in fee is due to the price deprecation ETH has faced lately. And, also because of the subsequent drop in the demand to make ETH transactions.
💸 With #Ethereum dropping back below $3,000, the demand to make $ETH transactions has stayed relatively low. And with this, transaction fees are now officially at their lowest level since July 28, 2021. Low fees typically maximize the chances of a bounce. https://t.co/zTg2CSd3xO pic.twitter.com/qTO2vao940
— Santiment (@santimentfeed) February 13, 2022
Similarly, a significant drop in large token holders has also been noted on the network recently, indicating that ETH large holders might be exiting the network en masse. Addresses holding over 1,000 ETH have been touching lows not seen since 2018. Thus, indicating that the price dip is being accompanied by whale dumping.
Previous 4-year low of 6,228 was observed on 11 February 2022
— glassnode alerts (@glassnodealerts) February 13, 2022