Ethereum
Information about Ethereum cryptocurrency price fluctuations
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Ethereum is considered the second most popular cryptocurrency after Bitcoin. The price of Ethereum Bitcoin has had its ups and downs. Why does its price fluctuate so much and how can investors manage these ups and downs?
Some background: What is Ethereum?
Ethereum isn’t just a digital currency. It’s a platform that allows developers to build and run applications without a central authority (like a bank or government). This differentiates it from Bitcoin, which is primarily a form of digital currency.
The currency used on this network is called Ether (ETH). Since its launch in 2015, Ethereum has become the backbone of many innovative technologies, including decentralized finance (DeFi) and digital collectibles known as non-fungible tokens (NFTs).
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Ethereum Price History
The price of Ethereum has had its ups and downs. When it was first launched, Ether was worth around $0.30. In early 2018, during the height of interest in cryptocurrencies, its price skyrocketed to around $1,400. However, this boom was followed by a severe crash, which caused the price to drop to around $80 by the end of the year.
Despite these fluctuations, Ethereum has shown resilience. In 2021, it reached new highs, surpassing $4,000, likely due to the growing popularity of Challenge and NFTs. These technologies are primarily built on the Ethereum network, leading to increased demand for Ether.
Why does the price of Ethereum fluctuate so much?
Several factors contribute to Ethereum price fluctuations:
- Market Sentiment: Just like the stock market, cryptocurrency prices are heavily influenced by people’s thoughts and feelings. Positive news, like a major company joining Ethereum, can drive the price up. Negative news, like a hack or tighter regulation, can drive the price down.
- Technological development: Ethereum is constantly being updated and improved. Progress or delays in these updates can also affect the price of Ether.
- Network usage: The more people use Ethereum for transactions, smart contracts, and applications, the higher the demand and price of Ether will generally be.
- Competition: Other cryptocurrencies like Binance Smart Chain, Cardano, and Solana offer similar features to Ethereum, but often with lower fees and faster transactions. This competition can influence Ethereum’s market share and price.
Navigating through the ups and downs
For those considering investing in Ethereum, here are some tips for managing its price volatility:
- Think long term: If you believe in Ethereum’s future potential, holding on to your investment through its ups and downs might be a good strategy.
- Stay informed: Stay up to date with Ethereum news and developments. Understanding what’s happening in the market can help you make better investment decisions.
- Use risk management tools: To protect yourself against large losses, consider using tools like stop-loss orders, which automatically sell your investment if the price falls below a certain point.
Ethereum’s price volatility can seem daunting. However, understanding the factors that drive price movements and adopting a thoughtful investment approach can help investors better navigate its ups and downs.
This information is provided for educational purposes only and should not be used as investment advice. As with all investments, there are risks involved and past performance of a particular asset class is no guarantee of future performance. Any statements, recommendations or errors are those of the contributor and the reader is responsible for evaluating all information contained herein.
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