Ethereum continues to struggle with a challenging market structure. The world’s second-largest cryptocurrency by market cap has failed to return above $1.3K since falling from that mark in mid-November. This has prompted analysts to predict more downside for ETH and its token valuation, which has dropped significantly from its peak at the end of September. From that time, Ethereum has lost over 90% of its value and remains under heavy pressure amidst regulatory uncertainty and sell-offs across altcoins. Ethereum declined further throughout Wednesday, hitting new 2018 lows around $1.02 before beginning to climb again at the end of the day. It’s now trading around $1.10 and remains one of the worst-performing major cryptocurrencies this week. That crash was followed by a brief recovery before renewed pressure sent ETH even lower on Thursday and Friday — though it’s now recovering slowly once again as trading ends for the week…
More downside predicted for Ethereum
The $1.3K mark has proven to be a decisive level for ETH over the last month and a half. A decisive break below $1.3K was accompanied by a massive volume spike, and while Ethereum’s price recovered above that mark a couple times, it has failed to close above it. This failure to close above $1.3K and a new low below $1.2K are ominous signs for ETH and suggest that more price weakness is likely on the horizon. A break below $1.2K would be a major confirmation that ETH’s current bearish trend is sustainable and could prompt a full-on crash that would send its price to new yearly lows. Such a scenario remains possible given the current environment, as fundamental Ethereum developments are few and far between at this point.
Shifting fundamentals and investor behavior
Ethereum’s fundamentals have shifted significantly since its record bull run earlier this year and are now looking decidedly bearish. The SEC’s recent decision to classify ETH as a security has been a major factor in the token’s decline, as the regulatory uncertainty surrounding this classification has scared off many investors. The SEC’s decision was followed by a massive sell-off across the crypto market and prompted regulatory action in many countries around the world. This has created a regulatory landscape that’s much less friendly to Ethereum and other decentralized assets than it was just a couple months ago.
ETH is at its cheapest in 2 years
While the fundamentals have shifted against Ethereum, its token valuation has nonetheless fallen significantly due to its declining price. ETH was trading at over $1,300 per token at the end of September and is now worth less than $100. This represents a full 98% drop from ETH’s all-time high and has made it extremely cheap relative to the rest of the market. While ETH is still trading above $100, it has nonetheless fallen to its lowest level since July 2017. This has put ETH at a valuation that’s lower than any point since mid-2016 and represents a major buying opportunity for investors.
Ethereum’s developer ecosystem
Ethereum’s developer ecosystem has also taken a hit over the last few months. The formation of new competing blockchain networks and the departure of key developers has brought ETH’s development to a screeching halt. Ethereum has fallen behind in the race to implement new innovations and has failed to keep up with new blockchain projects that have been moving at breakneck speeds. This has left Ethereum’s developer ecosystem in disarray, with no major developments or upgrades on the horizon. This lack of development is likely to be temporary as the Ethereum Foundation and other development teams reassert their control over the network. However, it nevertheless shows that Ethereum’s development has taken a hit and is no longer progressing at the blistering pace it was during the summer.
Conclusion
Ethereum has fallen to its cheapest level in 2 years and appears primed for more downside amid a lack of developments and a less friendly regulatory landscape. However, its token valuation may also offer investors a buying opportunity given that ETH is also one of the most widely-used blockchain networks in the world.
