Ethereum may see more downside. Despite the crypto’s bearish price action in 2019, Ethereum has made significant fundamental progress.
Just like bitcoin, Ethereum has been correcting ever since it posted a high in June 2019. From last year’s high of $363.30, the number two cryptocurrency has lost over 62% of its value. Those losses are significantly magnified if you consider that Ethereum traded at $1,424.30 in January 2018. From the all-time high, ether has already shed over 90% of its value.
To some retail traders, the extreme losses would indicate that the bottom is on the horizon. However, one analyst believes that investors are likely due for more pain in the form of a persistent bear market.
Ethereum’s 2020 could start off on the wrong note. Analyst Crypto White Walker expects Ethereum to enter a period of depression. In the psychology of market cycles, depression is the stage where all hope for recouping losses are lost. This is the phase where many retail traders capitulate and never look back.
The analyst draws inspiration from Ethereum’s price action in 2017. At the time, the token was trading below $8.00. It slumped to $7.00 before igniting a mega bull rally. According to the trader, the cryptocurrency will likely go through one more painful leg down before it can recover.
The good news is that once the cryptocurrency bottoms out, it might reward long-term investors with substantial gains. Crypto White Walker predicts that after Ethereum nosedives to below $100, it would skyrocket to $1,000 and above in 2021.
Regardless of slumping prices, Ethereum’s fundamentals continue to progress.
One of its most notable advancements is the introduction of Decentralized finance (DeFi), which refers to financial tools built on top of Ethereum’s blockchain. These tools offer certain advantages such as better access to financial services and resistance to censorship. DeFi users voluntarily lock their ETH on DApps that offer services such as lending pools in exchange for payouts.
Those in the know are taking advantage of this profitable feature. So far, over 3 million ETH are locked in DeFi.
In addition to the parabolic rise of ETH holdings in DeFi, the number of unique Ethereum addresses continues to grow. It surged from over 50 million last year to more than 84 million this year. This suggests that the number of Ethereum users is growing.
Lastly, Ethereum maximalists are excited for the scheduled launch of Ethereum 2.0’s phase 0. The first step in the transition from proof of work to proof of stake is expected to take place in the first quarter of this year. In phase 0, users will be able to stake their ETH holdings.
From a fundamental perspective, it seems that Ethereum is making exciting developments. It’s most likely only a matter of time before the price catches up.
Disclaimer: The above should not be considered trading advice from CCN. The writer owns Ethereum and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.
This article was edited by Sam Bourgi.
Last modified: January 22, 2020 11:39 PM UTC