Digital assets behave unpredictably in the market. Their value rises and falls rapidly. Traders have to look for objective reasons for such volatility in order to predict further price movement. If the Ethereum exchange rate falls today, it is reflected in the news agenda, charts and traders’ actions.
Transition of traders from BTC to ETH
Ethereum is Bitcoin’s main competitor not only technologically, but also market-wise. Since its introduction in 2015, the coin has been the second largest in terms of capitalization.
Many investors include ETH in their portfolios to diversify risks. The creators themselves continue to actively work on the etherium blockchain, and the coin is setting new historical highs.
| Date | Rate |
|---|---|
| 20.10.21 | $4040 |
| 20.10.20 | $369,14 |
| 20.10.19 | $175,53 |
| 20.10.18 | $205,43 |
| 20.10.17 | $304,01 |
| 20.10.16 | $14,43 |
| 20.10.15 | $0,43 |
Why Ethereum rate is falling
For 6 years, the trend has not always been positive. Reasons for the fall in the exchange rate of etherium (ETH) today:
- Correction. In the cryptocurrency market, after a sharp increase in price, quotes usually fall by a few percent. A correction is part of a trend, so it does not always indicate a reversal. It can be seen as a “pit stop” for bulls.
- Regulation. If major countries ban cryptocurrency, it negatively affects the value of all digital assets – some local investors get rid of coins.
- Dump. The cryptocurrency market is considered very speculative. Private investors collude to artificially collapse the value of the coin. Traders who opened a long with leverage have to close their positions, which amplifies the effect of the drop.
- Negative background. Assets are sensitive to statements from opinion leaders. In late June 2017, there were rumors about the death of ETH founder Vitalik Buterin. Then the coin’s rate fell from $341 to $272 in a few days.
Impact on mining
Mining revenue depends largely on 2 parameters:
- Electricity prices.
- The exchange rate of the coin.
If the quotes go down, it becomes unprofitable for miners with expensive electricity to mine ether. In practice, users do not immediately sell new coins, but accumulate them. In October 2021, miners collected a record amount of ETH on wallets – 532.75 thousand.
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Volatility
On the one hand, constant fluctuations allow traders to make quick money on short-term strategies. On the other hand, they make large investors nervous.
As the price rises, volatility falls. To move the rate by a few percent, you need to invest more money. Because of this, the value of cryptocurrencies with low capitalization changes more than that of ETH or BTC.
Large capital is buying Ethereum
Whales have long been interested in the potential “killer” of bitcoins. Large investors are gradually building up assets. According to the Sentiment service, from 2018 to 2021, whales have increased capital from 35.8% to 43.7% of total ether.
On the one hand, the influx of large capital provides growth, on the other hand, whales will sharply collapse quotations if they start selling the coin.
The growth of etherium wallets
Creating a vault for cryptocurrency can be done in a couple of minutes. Accessibility and simplicity lead to the gradual growth of wallets. One user can create multiple addresses for etherium.
New users have no choice but to purchase the asset. Most already know how to make money on the growth of the cryptocurrency. Only experienced traders dare to play down (short).
If ether has fallen in price on the exchange, this may be the best time to buy.
Ethereum rate forecast for the near future
In the current environment, ETH remains the dominant coin and blockchain for ICO launches. As a result, the demand for ether is gradually increasing.
Not only technical parameters influence the positive dynamics. In September, China banned cryptocurrency in September, but quotes sagged slightly. This is due to the high confidence of traders in decentralized networks.
Etherium has several fundamental differences from other assets, such as shares, due to which it attracts investments:
- There are no restrictions. You can transfer and trade any amount.
- Transparency. Transactions are available to view on the blockchain.
- Technologicality. Smart contracts in the etherium network find application in other projects.
- Independence. No regulator or country can stop the blockchain from working.
Summary
Cryptocurrencies are traded under any market conditions. If users do not want to learn trading, they prefer long-term strategies.
Coins are suitable for investments for 5-10 years. Practice has shown that assets with large capitalization increase in value over time. If a cryptocurrency becomes cheaper, you should not panic. The bearish trend will not last forever.
Frequently Asked Questions
🔽 How to make money on falling ether?
A short or short position is an order to sell an asset in order to capitalize on a declining rate. If a trader does not have ether on his balance, he can borrow the necessary number of coins against the security of other cryptocurrencies, for example USDT.
📉 ETH can depreciate in value?
Any asset will drop to zero if it stops being bought.
❓ Who sets the rates?
Quotes depend on supply and demand – all market participants influence the parameters.
💰 Where can I buy ETH?
Cryptocurrencies are bought through an exchange, for example, Binance. Alternatively, exchangers, P2P services and terminals are used.
❔ Who is allowed to trade cryptocurrency?
Any user who has reached the age of majority can conclude transactions. The exception is countries where digital assets are prohibited.
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Author: Saifedean Ammous, an expert in cryptocurrency economics.
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