Ethereum, the second-biggest cryptocurrency in the world based on market capitalization levels, has been dealing with a difficult period throughout the last two years as a result of price fluctuations and variations in value. Many users are now wondering what is the price of Ethereum, as investors have begun consolidating their portfolios again in response to the predictions that say prices are bound to start climbing again very soon and that a bullish rally is imminent. And while it’s certainly true that prices have been growing over the past months, there have been bumps in the road as well.
Gas fees
The gas fees are separate fees investors must make on the Ethereum blockchain when they want to complete transactions or execute the smart contracts. Over the last months, the amount investors have to pay has continued to grow, making the ecosystem unsustainable for many. In fact, there were traders who had to postpone all activities and processes because they couldn’t deal with the fees anymore. In February 2024, gas fees skyrocketed to steep levels not seen since March 2023.
The main reason for that is the emergence of the ERC-404, which led investors to want to capitalize on its early stages. This experimental token has ushered in a new trend, something not unheard of in the crypto ecosystem that is based quite a lot on the latest hype. On February 9th, the gas prices on the network averaged 70 gwei but then promptly surged to 377. ERC-404 launched on February 5th and has gained 6,100% in less than a week, as well as nearly $500 million in volume.
Macroeconomic factors
The cryptocurrency market is highly vulnerable to a plethora of internal and external factors, which is precisely why it is so difficult to keep up with the marketplace as a beginner trader, as well as why predictions are close to impossible in the crypto environment. Macroeconomic factors are an essential consideration as well. During the first week of February, the Ethereum price jumped by roughly 10%, exceeding the $2,450 barrier for the first time in nearly a month.
The network activity backs the rally as well, as demand for coins continues to remain sustainable. Liquid staking applications and yield farming services were critical for the process, and the network managed to maintain its status as a leader in fees. The ERC-404 is another source of optimism for the marketplace, as the non fungible token format would allow fractional capabilities compared to the ERC-721 that is currently in place.
Investors are clearly not apprehensive about the resistance at $2,650, as the price action remains strong.
Staking
Ever since the last upgrade allowed users to withdraw their staked coins, the number of investors that started staking has grown exponentially. Starknet, the layer-2 staking protocol located on the Ethereum network, is set to begin distributing native tokens on February 20th, and the stakers will receive them as well. At the moment, data shows that over 1 million wallets are eligible to claim the tokens. This includes both liquid and solo stakers, as well as the developers, including those operating outside Web3.
At the moment, the aim is for the contributors to benefit first and take priority, but that staking is part of the future plans. The Starknet builders are eligible by default, following a verification of their past activity. The DApps working with Stark tech are included as well. Solo stakers, including the ones that locked up their coins before the Merge was launched in 2022, will all be eligible as well.
Trading bots
As more people enter the trading environment, the ecosystem begins to change in order to accommodate the demands. There are many sophisticated tools that are steadily introduced in the trading process, with trading bots being one of the latest. Since there’s no shortage of issues associated with a decentralized finance system, it’s clear to see that all investors would benefit from the use of this technology.
DEX trading bots can analyze trends and predict movements and price fluctuations more accurately. The emergence of this technology is a direct result of a growing need in the ecosystem. Carbon DeFi is another part of the initiative to make trading more automated. It lets traders design their own strategies and includes a user-friendly interface that everyone can operate. The technology was created to empower users and increase the control and security of traders in the fast-paced crypto environment.
Over the past few years, there have been increasing concerns that the crypto ecosystem is becoming more centralized. This is something many investors are concerned about since it is in complete opposition to the initial plans for the networks. Most of the traders were attracted to the marketplace specifically because it meant they could enter a decentralized space in which they had more control of their finances.
The new tech will change the approach to become more user-centric again and overcome well-established hurdles such as low liquidity levels and limited functionality. With help from the bots, users have more control and precision over their trading strategies so that buying and selling occur in better-defined parameters.
Price metrics
Although prices remain volatile in the cryptocurrency environment, the bullish momentum is clearly more solid than some investors may have initially believed. Ethereum remains a leader in decentralized app deposits, especially following the Solana network outage on February 6th that affected block productions and caused many exchanges to suspend all withdrawals and deposits.
The staking flows are also favorable for the bullish momentum. Reserves have plummeted to the lowest levels they’ve had in over twelve months, showing that holders are in no rush to part with their coins. The derivatives also show that the bulls and bears are relatively evenly balanced and that fixed-month contracts will trade between 5% and 10% during the extended settlement period.
The cryptocurrency market is still changeable and unpredictable, but the data shows that things are certainly improving. Investors are starting to look into ways to grow their portfolios again and protect their holdings. If you’re new to the market, avoid rushed decisions and make sure you have a solid strategy. And, as always, don’t invest more than you feel comfortable potentially losing.
