Bitcoin's price has dropped to $61,500, the lowest since early May, and is down over 10% from its recent peak. At the same time, other major cryptocurrencies like Ethereum, XRP, and Solana have seen even steeper declines, causing the total market value to shrink by $200 billion in the past week. The second major crypto ETH is also dropping. Will ETH price fall below $1000? Let's take a look at this Ethereum price prediction article in more detail.
How has the Ethereum Price Moved Recently?
Today, Ethereum is priced at $3,332.52 with a daily trading volume of $24.88 billion and a market cap of $400.36 billion, holding 17.73% of the market. Its price has dropped by 5.53% in the last 24 hours.
Ethereum hit its highest price of $4,867.17 on November 10, 2021, and its lowest price of $0.42 on October 21, 2015. The lowest price since its all-time high was $897.01, and the highest since then was $4,094.18. Currently, the market sentiment for Ethereum is bearish, and the Fear & Greed Index is at 51, indicating neutrality.
There are 120.14 million ETH in circulation, with a yearly supply decrease of 0.24%, meaning 292,161 ETH were removed from the supply over the past year.
Is Ethereum Price About to Implode Further?
The response and market sentiment toward Ethereum spot ETFs have been less enthusiastic compared to the excitement seen with the launch of Bitcoin ETFs earlier this year.
This observation comes from crypto entrepreneur and investor Andrew Kang, who shared a detailed analysis of the effect of Ethereum ETFs on X on June 23.
While Bitcoin ETFs attracted numerous new investors, making it easier for them to include BTC in their portfolios, the influence of ETH ETFs is much more uncertain, according to Kang.
Kang predicts that the flow of funds into Ethereum ETFs will be about 10% to 15% of what Bitcoin ETFs experienced, leading to an estimated $500 million to $1.5 billion in net buying within six months.
Last week, it was reported that Fidelity would start its Ethereum ETF with $4.7 million, indicating that the buying has already started. In March, Standard Chartered forecasted that inflows could reach $45 billion in the first year of Ethereum ETF trading.
However, Kang explained why the impact of an Ethereum ETF might be less significant than that of Bitcoin. He noted that Ethereum is considered more of a tech asset, unlike Bitcoin, which is viewed as a macro asset. Additionally, there is less institutional interest and buying pressure for Ethereum. Its current valuation metrics, such as the price-earnings ratio, make it a harder sell for traditional finance investors, he said.
The limited inflows and institutional interest could mean a smaller impact on Ethereum's price compared to Bitcoin, as the expected buying pressure from ETFs will be less intense.
Will Ethereum Price Drop Below $1000?
To determine whether Ethereum's price will drop below $1000, we need to analyze several key factors influencing its market dynamics. Ethereum's price has increased by 75% in the last year, indicating a strong upward trend. It has outperformed 57% of the top 100 crypto assets over the same period, showcasing its competitive edge in the market. This historical growth reflects solid investor confidence and a robust market position.
From a technical perspective, Ethereum is trading above the 200-day simple moving average, a bullish indicator that typically signals continued strength in price action. Despite recent fluctuations, maintaining this position above a crucial moving average suggests that the market sentiment remains relatively positive. This technical strength is a reassuring factor for investors concerned about potential price declines.
Ethereum's supply dynamics also play a crucial role in its price stability. The yearly inflation rate is negative at -0.24%, meaning the supply of ETH is decreasing slightly over time. This deflationary characteristic can support higher prices as supply diminishes, adding another layer of price support. With a high market cap and substantial liquidity, Ethereum is less prone to severe price swings compared to smaller, less liquid assets. This stability can act as a buffer against drastic price declines, further reducing the likelihood of the price falling below $1000.
While Ethereum has been outperformed by Bitcoin recently, which may attract some investors away from ETH, this doesn’t necessarily imply a price drop below $1000 but rather a potential shift in capital allocation within the crypto market. The fact that Ethereum had only 13 green days out of the last 30 (43%) suggests some short-term bearish sentiment. This could indicate potential short-term volatility, but not necessarily a significant long-term decline.
Despite lower inflows expected from Ethereum ETFs compared to Bitcoin ETFs, the initiation of these financial products still reflects institutional interest. The additional buying pressure from these ETFs, even if modest, can help sustain or increase the current price levels. Analyst Andrew Kang’s prediction of lower ETF inflows compared to Bitcoin and the challenges in Ethereum’s valuation metrics could result in a less pronounced price increase. However, considering Ethereum’s strong performance metrics, negative inflation rate, and high liquidity, a drop below $1000 seems unlikely under normal market conditions.
So, while short-term fluctuations and bearish sentiment can lead to temporary price drops, Ethereum's strong historical performance, technical indicators, negative inflation rate, and high liquidity provide a solid foundation against a decline below $1000. Therefore, based on the current data and market conditions, it is improbable that Ethereum will drop below $1000 in the near future.
