During the first quarter of 2022, the entire crypto market dropped sharply.
Recently, this affected ETH with its November high (36%) as of writing. It took a toll on network activities like decentralized finance, transaction fees, borrowing rates, and trading volume.
As per Finder.com, ETH will reach $7,609 this year. It will be roughly 102% higher than its starting price when this happens. The thing is, it has been forecasted that ETH will fall back to $6,500, as the panel average indicates.
Just like BTC dip, ETH price drop has been predicted. The thing is, rallies for BTC and ETH have been powerful for several months. So right now, it looks like ETH is returning to its actual state. In fact, it took a toll on network activities like decentralized finance, transaction fees, borrowing rates, and trading volume.
The Ethereum community should be prepared for future challenges with that in mind. Of course, bad news and hacks will happen, but they shouldn’t be considered as obstacles to Ether’s price. On the contrary, overcoming them will make ETH more resilient in the future. In this sense, it takes time to adjust the profit-taking strategy and re-adjust a bear market until its end.
Reasons Why ETH And BTC Drop
Ethereum drives the world. It’s highly secure, scalable, and has a lot of potential in that sense. What makes it interesting is how fast it grows. It’s one of the fastest-growing blockchains and most followed cryptocurrencies.
The coin can change the world by harnessing this ever-growing potential. In that sense, it’s becoming a better version of Bitcoin, and considering its real-life applications, it is a promising altcoin.
With that in mind, ETH is just like any other currency. Cryptocurrency exchanges are where you purchase or sell ETH, Bitcoin, or USDT (Tether), which serves as an alternative for USD.
With the recent drop in prices, it means that the cryptocurrency exchanges where you purchase or sell ETH, Bitcoin, or USDT took a vast decline in their revenue. They have been losing tens of trillions since January.
In addition to that, many traders are now moving to a safe spot where they can buy and sell cryptocurrencies like BTC and ETH at a lower price. Most experienced traders are moving to Bitfinex, a safe trading spot compared to other centralized exchanges. This ensures that they don’t lose too much money when bad news comes.
Important Lessons For Investors
Investors need to learn that the market can only rise and fall so much. So many factors, including regulations, hacks, and bad news, affect the prices. When it comes to decentralized currency exchanges, they are not immune to their impacts.
In that sense, the market can only rise and fall so much. So when this happens, the best thing you can do is take advantage of it. But, of course, you can always wait for it to recover, or you can even wait outside the bear market until it ends. Either way, don’t panic if your profit is taken back. In that sense, it takes time to adjust profit-taking strategy and re-adjust a bear market until its end.
Keep these things in mind:
1. To make any investment decision, you need to know the risks associated with it. Therefore, it is imperative to understand the risks of investing in cryptocurrency and fiat currency like USD.
2. Never buy a crypto investment because it has a reasonable price tag. Based on experiences from investors over the years in trading, it’s important to be selective when deciding which Altcoins you should buy.
3. Don’t buy almost every single cryptocurrency that you see. You might not sell most of it.
4. Never forget to check the security and other features of a certain cryptocurrency exchange. Make sure you compare them to each other to make an informed decision. For example, you can search on Google “is BTC exchange secure” or “is ETH exchange secure” or something similar, and if the answer is yes, then choose that one as a priority.
5. Don’t hold your crypto tokens for too long. Know when to sell them, or you may have to regret it later.
6. Before diving into a crypto investment, it is a wise decision to check the indicators. These factors can tell you how well a certain cryptocurrency will perform in the next few days and months.
In conclusion, many traders have been taking profits as what they need. So, in that sense, the chances of a crypto bear market lasting too long are genuine.
Therefore, investors need to know its risks to be ready for this eventuality. They also need to make sure that they don’t buy or sell cryptocurrency investments so frequently that it affects the price of their investment.