Ethereum's High, High Hopes May be Shattering
Kiana Danial | Dec 06, 2018 11:51PM ET
The future looks grim for Ethereum, and prices for it are back in double-digit territory, setting a new low that it hasn’t seen since early 2017. Today we’ll take a fundamental and technical look at what once had high high hopes.
Ethereum entered the year with high hopes, after being used as the launchpad for the majority of initial coin offerings. Although initially proposed as a “World Computer,” the Ethereum network simply hasn’t been able to handle the transaction volume that users are throwing at it. Even simple programs, like Crypto Kitties, have caused skyrocketing transaction fees, making Ethereum impractical for all but the simplest decentralized applications. That doesn’t mean the end of Ethereum, and developers are working on ways to make Ethereum faster and greener.
Programmers are hoping to change Ethereum’s consensus algorithm from mining, which uses a lot of energy, to a more efficient staking system. In addition, they’ve also proposed solutions like sharding, which would allow the blockchain to handle more transactions in a shorter time.
Now for Ethereum traders out there, let’s take a look at its price action on the daily chart. Wednesday’s 8 percent drop brought the ETH/USD pair one step closer to a key support level I identified a couple of months ago, at $80, which is where Ethereum’s price was at back in May 2017. A drop below this level could open doors for further drops towards the lows of March 2017 at around (brace yourself) $11!
Now you may be asking, is this the death of Ethereum? Personally, I doubt it. Its survival ultimately depends on the fundamentals and how fast the network’s technology can improve to stay on top of the competition. On the bright side, if either of the support levels I mentioned is strong enough to hold the price from dropping lower, we could expect the next bullish momentum to start just right there.
With that, now I’d like to hear from you. Do you think Ethereum has got what it takes to push through the challenges? And how low do you think Ethereum will go in this bear market? As always, let me know in the comments.
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