Experts assessed the dynamics of the leading altcoin after switching to a new algorithm and assessed its future prospects.
On the eve of the update, the rate of the second largest cryptocurrency by capitalization has grown by more than 20% in two weeks - from levels of about $1.4 thousand to $1.7. But while the Merger was a success, Ethereum’s price dropped 15% in the week since, according to CoinGecko. In general, the transition of Ethereum to staking clearly did not live up to expectations: it was predicted that this event could lead to a strong increase in the value of the coin, but the reality turned out to be different, over the past week the rate has noticeably decreased, although the same trends are true for bitcoin and other cryptocurrencies .
According to our experts, the overall economic and financial environment outweighs all positives. Fundamentally, all markets, including cryptocurrency, are now under pressure from the prospect of the global crisis, the rapid growth of inflation in developed countries, as well as the increase in rates by the central banks of the world and, first of all, the Fed, analysts explain. Although, from a technical point of view, there were no noticeable deteriorations or improvements. Only the news background has changed. In the current context, the good news is that the project has become more environmentally friendly after moving away from mining. The negative aspects include the questions that have arisen regarding the greater centralization of validators than previously with mining and full nodes (a separate network node located on the same computer), pressure from financial regulators on coins with the PoS algorithm (attempts to recognize them as securities) and, of course, , departure of miners.
“As long as everything goes according to the original plan, it’s impossible to talk about failure, although it’s too early to consider the transition a victory,” says Konstantinas Sizovas, CFO of the ASTL investment project, “the fall in the price of Ethereum is due to the fact that it has long been reflected in the renewal of the network and the asset was fairly overbought. With the event itself, the hype subsided and demand was obviously lowered, which accelerated the fall."
Since already tonight we, in all likelihood, will learn about a new increase in the rate of the American Central Bank (+0.75-1 p.p. is predicted immediately), this will definitely lead to another decrease in cryptocurrencies. ETH can lose at least 5-7% of its value per day. Konstantinas Sizovas expresses confidence that the recovery of not only Ethereum, but the entire market is possible with a decrease in key rates and the growth of the global economy. And this will obviously not happen soon.
If the asset cannot stay above the price of $1.43 thousand, the rate will move to the level of $1.11 thousand and then to $1.02 thousand. If at least some of the risks are removed (for example, a coin is not recognized as a security), then $1.93 thousand will act as a support level. Long-term expectations are, in principle, positive, which is explained by the fact that the new consensus model will create an artificial shortage of tokens circulating on the market, which will lead to a natural price increase. Expectations from the next stages of the big ETH 2.0 update may also have a positive effect. Konstantinas Sizovas explained that the transition to PoS was only one of the stages, albeit the most noticeable for the media.
But Ethereum still expects sharding in the future, which will increase network bandwidth by several orders of magnitude, our financial analyst said. He explained that sharding is a method of partitioning and storing a single logical set of data as multiple databases. Using Ethereum as an example, it will be divided into 64 separate blockchains that will be able to exchange data with each other, but at the same time process transactions independently of each other.
In such conditions of increasing "raids" from government regulators, high market volatility and "tremor" of cryptocurrency rates, ever higher Fed and ECB interest rates, ever-increasing inflation and even higher inflation expectations - the most reliable and stable way not only to store own funds in cryptocurrency, but also receive a stable passive income - investing your cryptocurrency or fiat assets in the ASTL project (https://astl.io) with stable ROI payments up to 18% per annum on initial investments that do not depend on crypto market fluctuations, and in stable cryptocurrency - USDT.
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