News
Insights into Ethereum Cryptocurrency Price Fluctuations
Getty Images
The editorial and writing staff of Lee Enterprises were not involved in the creation of this content.
Ethereum is considered the second most popular cryptocurrency after Bitcoin. The price of Ethereum has had its share of ups and downs. Why does its price fluctuate so much, and how can investors manage these ups and downs?
A little context: What is Ethereum?
Ethereum is not just a digital currency. It is a platform that allows developers to build and run applications without a central authority (like a bank or government). This makes it different from Bitcoin, which is primarily a digital form of money.
The currency used on this network is called Ether (ETH). Since its launch in 2015, Ethereum has become the backbone of many innovative technologies, including decentralized finance (DeFi) and digital collectibles known as non-fungible tokens (NFTs).
People also read…
Ethereum Price History
Ethereum’s price has seen its share of ups and downs. When it was first launched, Ether was priced at around $0.30. In early 2018, amid intense cryptocurrency interest, its price skyrocketed to around $1,400. However, this boom was followed by a major crash, which took the price to around $80 by the end of the year.
Despite these fluctuations, Ethereum has shown resilience. In 2021, it reached new heights, surpassing $4,000, likely due to the growing popularity of DeFi and NFTs. These technologies are mainly based on the Ethereum network, which leads to a higher demand for Ether.
Why does the price of Ethereum fluctuate so much?
Several factors contribute to Ethereum price fluctuations:
- Market Sentiment: Like the stock market, cryptocurrency prices are heavily influenced by people’s thoughts and feelings. Good news, like a major company starting to use Ethereum, can drive the price up. Bad news, like a hack or stricter regulations, can drive the price down.
- Technological developments: Ethereum is constantly being updated and improved. Progress or delays in these updates can also affect the price of Ether.
- Network Usage: The more people use Ethereum for transactions, smart contracts, and applications, the higher the demand and price of Ether will usually be.
- Competition: Other cryptocurrencies such as Binance Smart Chain, Cardano, and Solana offer similar functionality to Ethereum, but often with lower fees and faster transactions. This competition can impact Ethereum’s market share and price.
Navigating through ups and downs
For those thinking of investing in Ethereum, here are some tips for managing price volatility:
- Think long term: If you believe in the future potential of Ethereum, holding onto your investment despite its ups and downs might be a good strategy.
- Stay informed: Stay up to date with Ethereum news and developments. Understanding what’s happening in the market can help you make better investment decisions.
- Use risk management tools: To protect yourself from significant losses, consider using tools like stop-loss orders, which automatically sell your investment if the price drops to a certain point.
Ethereum’s price volatility can seem intimidating. However, understanding the factors that drive its price changes and taking a thoughtful investment approach can help investors better manage its ups and downs.
This information is intended for educational purposes only and should not be used as investment advice. As with all investments, there is risk and the past performance of a particular asset class does not guarantee any future performance. Any claims, recommendations or errors are the sole responsibility of the contributor and the reader is responsible for evaluating all information contained herein.
Get local news delivered straight to your inbox!
Sign up for our Daily Headlines newsletter.