Ethereum price is tilting upwards on Tuesday as sentiment in cryptocurrencies and global stocks improved. Ethereum is trading at $4,027, where it has been in the past few days. That has brought its total market capitalization to more than $478 billion. The fear and greed index has moved to the extreme fear zone of 25.
Is Ethereum a Good Investment?
Ethereum and other cryptocurrencies have struggled in the past few weeks. Its price has declined by more than $800 from its highest level on record. In other words, investors who trade Ethereum have lost more than $50 billion since the second week of November.
There are several reasons for this sell-off. First, the biggest reason for the performance of Ethereum is the Federal Reserve. In its response to the pandemic, the Fed decided to lower interest rates to zero. It then boosted its balance sheet by buying assets worth more than $120 billion per month.
Last week, however, the Fed signalled that the easy-money policies are about to come to an end. The bank hinted that it will deliver three interest rate hikes in 2022. That was higher than what analysts were expecting. At the same time, it decided to double the size of its taper to $30 billion.
Second, Ethereum price has declined because of tax-loss harvesting in the United States. This is a tax provision that enables people to offset their taxes by selling their holdings at a loss. They can then buy the same asset while avoiding the wash sale rule since it only applies to other financial assets like stocks and exchange-traded funds.
Third, there is a likelihood that many Ethereum investors are taking profit since ETH price has jumped sharply this year. It has gained by about 300% year-to-date.
Still, there are two main reasons why Ethereum could bounce back. First, while it is facing significant competition, it has held really well. Indeed, it holds more than 80% of all decentralized autonomous organizations (DAO). The migration to ETH 2.0 will make it be in par with other Ethereum-killers,
Second, there is a likelihood that the industry will bounce back as investors embrace the new normal in monetary policy.
Ethereum Price Prediction in 2022
The daily chart shows that the Ethereum price has found a strong support near the current range. The coin is slightly above the ascending trendline that is shown in blue. It is also slightly above the chin of the double-top pattern.
Therefore, while there are some bearish signs, there is a likelihood that the Ethereum price will bounce back in the coming weeks. Besides, it appears like it has struggled to move below $3,600. If this happens, the next key target to watch will be at $4,500.
Best Brokers to Buy Ethereum in 2022
Part of knowing how to buy Ethereum (ETH) is choosing the right broker.
We created a guide on the best Ethereum Brokers in 2022 where we have listed the top-beginner friendly platforms to help you get started right away. Here are some examples:
Invest in Ethereum using Auto Trading Robots
There are many methods to invest in Ethereum (ETH), especially in 2022. One of them is using auto trading robots such as:
