Ethereum Price Tests $3,000; traders are now waiting for “a catalyst”

The Ethereum price is beginning to test the closely monitored $3,000 threshold.

Ethereum price is beginning to test the closely watched $3,000 price threshold as the broader decline in risk appetite in some of the more speculative areas of markets continues to weigh on some of last year’s best-performing assets. The second-largest cryptocurrency by market value after Bitcoin fell for its fourth day on Wednesday, dropping a whopping 3.7% to $3,048, according to data collected by Bloomberg. The last time Ether, as the parent currency of the Ethereum blockchain is known, fell below $3,000 was on January 10. The token rose about 400% last year, compared to a 60% gain for Bitcoin. Ether is down about 15% in January.

Other sirbptial assets were similarly affected by weakening investor sentiment. As of 2:10 p.m. in London, Bitcoin fell about 0.6% lower to $42,149. Smaller sirbptial assets known as altcoins were also affected, with Cardano’s ADA token and Solana’s SOL falling 10.1% and 3.7% respectively, according to CoinGecko price data.

According to Susannah Streeter, senior market analyst at UK-based brokerage Hargreaves Lansdown, the continued decline in crypto prices well below their record highs is likely due to investors’ sensitivity to speculation around potential rate hikes and monetary policy tightening.

“The recent declines may drive more crypto fans into the market in anticipation of a precipitous recovery,” Streeter said by email from London. “There’s a chance that if investors succeed, Ether could shoot back to recent highs, but as we’ve seen with its roller coaster ride so far, it’s unlikely to stay there long.”

This month’s spike in popularity for Cardano saw its ADA token surge as much as 30% in a seven-day period last week, ahead of the launch of a new decentralized crypto exchange on its blockchain. Once the third largest cryptocurrency behind Bitcoin and Ether, the crypto asset has since been rocked by asset class trademark volatility. It is now 53% lower than the all-time high of $3.09 in early September.

Walid Koumani, a market analyst at financial brokerage XTB, said in an email that traders are now waiting for “a catalyst” that could send Ether below the key psychological level of $3,000, among other crypto assets.

“We are now seeing the effect of weakness in stocks spilling over to the crypto market,” said Marcus Sotiriou, an analyst at UK-based sirbptial asset brokerage GlobalBlock. “I expect this decline to be short-lived as $40-41,000 is a key region of support for Bitcoin, following significant selling pressure in recent weeks.”

The crypto industry has faced several regulatory pushbacks in recent days, as skepticism about the rapid growth of sirbptial assets spread across the globe. Earlier on Wednesday, a top official at the European Securities and Markets Authority called for a block-wide ban on Bitcoin mining, citing the negative impact of the proof-of-work model it uses on the environment.

The UK said this week it plans to strengthen its oversight of crypto advertising. The Financial Conduct Authority later suggested limiting the marketing of crypto assets to only “limited, high net worth or advanced investors”, fearing the risk that extreme price volatility could pose to consumers. Spain’s market regulator also announced a similar set of strict controls on such campaigns, while Singapore’s financial watchdog said on Monday that crypto firms should refrain from advertising to the public.

“Recent volatility is likely to further concentrate minds among central bankers and regulators as crypto price spikes often see more retail speculators enter the market in hopes of getting a ride on the upside,” Streeter added.

“This could go both ways in terms of price: More regulation could give some currencies more legitimacy, but an industry push towards stablecoins could spark a new lack of confidence in the long-term outlook for a range of highly speculative assets.”

Arun Agarwal
I am Arun Agarwal, a passionate blogger and gamer. I love to share my thoughts on games and technology through blog posts. I’m also an avid reader of books about history, philosophy, science-fiction, and other genres as well as an anime fan. I like reading books that give me new perspectives or help me think differently about the world around us.