Afterwards reaching an all-time high of more than $1,400 in January. The price of Ethereum has lost around 60% and was last trading at $515.
Here are 6 factors to help you make sense of it:
Ether or ETH is the native token of the Ethereum blockchain. Ethereum was created by Vitalik Buterin in 2013 as a platform for smart contracts. Think of it as an operating system on which new applications can be built and run. Also, think of ETH as fuel for the network and pay to complete transactions on the network like how you use fiat currency to pay bank charges and utility bills.
Tokens are like mini-applications which can be built on top of Ethereum, each with their own set of functionalities, features, purpose and benefit to their users. Think of them as apps on your smartphone.
Ethermint is the implementation of Ethereum written in Erlang which uses Proof of Authority (PoA) rather than Proof of Work (PoW) to mine blocks and validate transactions. The main benefit? Energy efficiency, better scalability and faster transaction times. Think of it as a car that can go up to 200 miles on a gallon of gasoline. PoW is the current consensus algorithm for Bitcoin and Ethereum which requires miners to expend computing power to solve complex mathematical puzzles in order to maintain the network’s security and confirm transactions.
We’ve been bearish on Ethereum because it broke below the level of $400 after forming a double top at $420. Our previous ETH price forecast remained in effect:
“Ethereum price is bearish below $420 because Ether failed to break out of the resistance at $420 and fell to a low of $405. While the support at $406 held, it also failed to pick up momentum above the 20-day EMA and Technical indicators fell sharply, suggesting a sell-off may be incoming. Note that this was partly due to Ether’s plunge against Bitcoin which reached a 2-month low of 0.070BTC today. ALSO, the ETHBTC price is now below our buy zone at 0.075BTC.”
Apart from the resistance at $420, I also expect ETH/USD to hold above $400 given that MACD and RSI are flat with no indication of a reversal so far. However, I want to reiterate my call for Ether to stay above $400 given its innate value as a means of exchange and store of value as well as its potential to scale much higher in terms of transaction per second than Bitcoin.
There’s been a lot of hype about Ethereum scaling to thousands of transactions per second. The current network can handle only 15 transactions per second and the more transactions which are transacted on the network, the more energy-intensive it is. However, some new protocols which have been developed in conjunction with Ethereum’s protocol such as Mijin (sold to J P Morgan) are in the works and could potentially enable faster transaction times on the network. In addition, there’s also a proposal to go back to Proof-of-Work (PoW) instead of Proof-of-Authority (PoA).
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