Ethereum’s recovery has stalled after the Fed signaled a rate hike in March. Here’s what that means
Ethereum price fell below $2,400 on Friday morning after almost hitting $2,500 overnight.
Since falling below $3,000 on Jan. 20, Ethereum’s price has been in freefall and fell below $2,200 on Monday — the lowest since July 2021. This week’s lagging price follows an announcement by Federal Reserve Chairman Jerome Powell that the Fed will likely start raising rates in March to counter the continued rise in inflation.
This month’s sharp drop for Ethereum – Bitcoin also saw a sharp drop – came amid the stock market’s worst week in nearly two years, and after the publication of the Federal Reserve’s long-awaited report on a possible digital currency issued by the government.
Investors are reviewing their portfolios in light of current market conditions, says Grant Maddox, a certified financial planner based in South Carolina. “Many investors are now eliminating risk from their portfolios. This could be a sign of a new market cycle,” Maddox told us recently.
Ethereum price has been between $2,100 and $2,700 so far this week. Here is how the current Ethereum price compares to its daily high point over the past few months:
|A week ago (January 21)||A month ago (December 28)||3 months ago (Oct 28)|
These recent sharp declines in Ethereum and Bitcoin come amid a continued rise in inflation, a disappointing December jobs report, and the publication of the minutes of the December Council meeting. Federal Reserve, which signaled that the central bank would begin to scale back measures to support the economy as it continues to improve.
After surging above $4,100 on Dec. 27, Ethereum has been hovering between $2,100 and $4,000 ever since.
Despite the recent crisis, Ethereum still had a relatively strong close in 2021. Ethereum set a new all-time high by breaking above $4,850 on November 10, and it maintained that strength through December before falling back at the end of the month. Even with the late crisis, Ethereum ended the year well above what it was at the start: in January 2021, the price of Ethereum was barely above $1,000.
Volatility and price slump continue as US navigates further economic uncertainty regarding Omicron COVID-19 variant, new comments from Federal Reserve Chairman Jerome Powell on the health of the economy and commentary from US policymakers like SEC Chairman Gary Gensler on cryptocurrency regulation.
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Like, Ethereum, Bitcoin has also stagnated over the past month after its own strong November; Bitcoin hit a new all-time high when it broke above $68,000 on November 10. The future of cryptocurrency will certainly include much more volatility in the price of Bitcoin and Ethereum, and the expert advice for investors remains the same.
What should Ethereum investors do?
As with any long-term investment, experts advise ignoring the ups and downs. The latest high price does not mean Ethereum’s volatility is gone.
“The real question is, owning these coins, will they continue to experience compound, exponential growth? Nothing in the fundamentals of cryptocurrency tells me the answer is yes,” says investment expert Jeremy Schnieder. behind Personal Finance Club.
Because there is no guarantee that the value of any cryptocurrency will increase, experts advise never investing more than 5% of your portfolio in cryptocurrency. Never invest at the risk of not achieving other financial goals, such as paying off high-interest debt or saving for retirement.
If you’ve hit all of these benchmarks, the best thing to do is ignore the hype around new record highs or lows. As with traditional long-term investments, the best thing to do is “set it and forget it,” Humphrey Yang, the personal finance expert behind Humphrey Talks, previously told NextAdvisor.
NextAdvisor reporter Alex Gailey contributed.