Ethereum Is On The Rebound and Likely To Recover

Mark Hake

Ethereum (ETH-USD) is now on the rebound after hitting a trough at the end of January. After peaking at $4,812.09 on Nov. 7, ETH crypto hit a low of $2,211.01 on Jan. 24. But since then Ethereum is back up to just below $3,000 ($2,988.55) as of Friday, Feb. 4.

Moreover, there are good reasons to believe that ETH crypto could rebound to its former heights. This means that Ethereum has a good chance to rebound back to $4,000 or higher by the end of the year.

Let's look at some of the reasons why this could happen.

Why Ethereum Could Rebound

For one, Ethereum has started to burn or eliminate come ETH crypto tokens in every transaction.

Also, The Daily Hodl quotes a Bloomberg senior commodity strategist, Mike McGlone, who thinks broader macroeconomic factors could benefit both Bitcoin (BTC-USD) and Ethereum.

“Crypto assets may have a lot going for them as US midterm elections approach, notably versus inflation-related commodities."

He specifically refers to both Bitcoin and Ethereum as they are the two largest cryptocurrencies. In addition, he points out that there has been a clear "technical" pattern established with Ethereum. There are typically buyers at $2,000 and sellers around $4,000.

However, if Russia does indeed invade Ukraine, financial markets could take a major tumble, as CNBC pointed out this week. This is despite the tumble that the markets already took in late January on the fears of a Russian invasion.

Ethereum's Popularity Makes It Easier To Trade

However, Bitcoin and Ethereum are extremely popular with investors these days. For example, according to the Wall Street Journal, Stocktwits announced this week that trading in these two cryptos will begin with its first foray into financial trading.

The crypto exchange FTX will be providing the infrastructure for Stocktwits’ crypto trading. Later on, it will expand into stocks.

This is a testament to the huge popularity on the financial social media site for Bitcoin and Ethereum.

For example, the CEO Rishi Khanna told the WSJ two powerful points. First, these two cryptos are among the most talked-about assets on Stocktwits. Second, they completely dominate the talk on weekends, mainly because they still trade while stocks don't.

Moreover, there are essentially no regulations relating to the trading in BTC and ETH crypto. So it doesn't take much to get going. On the other hand, the CEO points out that it is not easy to get a social media group off the ground in the cryptocurrency arena.

Where This Leaves Investors in ETH Crypto

Prospective investors in cryptocurrencies can figure that this is a good opportunity to take advantage of the weakness in ETH crypto. Moreover, existing investors will be able to average down their present cost in Ethereum by buying at these prices.

One of the reasons why Ethereum could stay weak is that institutional investors are still not that convinced about putting money in Bitcoin or Ethereum.

Here is an example. Decrypt magazine reported this week that JPMorgan analysts wrote a critical report about whether institutional investors will buy into Bitcoin or Ethereum.

For one, Bitcoin has been too volatile for most institutional investors according to JPMorgan. In addition, Ethereum has too many competitors, like Solana (SOL-USD) and Polygon (MATIC-USD). Given its problems with transactions, fees, and its blockchain validation issues (it still uses mining vs. proof-of-stake), Ethereum's upside is not guaranteed.

However, some of these issues could improve for ETH crypto later this year when the blockchain begins to use proof-of-stake (POS) to validate transactions. So far, however, it's not clear when that will happen. But investors are more hopeful this year that POS will help lower its fees and improve its competitive stance in the decentralized finance (Defi) arena.

Bottom line: there are very good reasons, despite its ongoing issues, why Ethereum could move significantly higher this year.

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This is not financial advice and you should not rely on my analysis to buy or sell any stock, bond, REIT, crypto, home, or insurance product as I am not undertaking to induce you to buy or sell securities or financial assets or home products. Additional information on Mark Hake's stock recommendations can be found at TipRanks.com.

I am relying on the “publisher’s exclusion” in the Investment Advisers Act of 1940 to provide this information without any personalized or individualized investment advice.

Mark Hake writes articles on InvestorPlace.com, Medium.com, and Newsbreak.com on stocks and cryptos and also runs the Total Yield Value Guide which you can review here.

He is a top-ranked financial writer, ranked 5 stars by TipRanks.com in the top 0.30% of all financial bloggers with an average return of over 20.0% on over 500 stock and crypto articles in the past year.

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Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks as well as cryptos, hedge funds, and private equity. He previously ran his own hedge fund, investment research firm, and acted as CFO for a fintech startup. He focuses on finding value, arbitrage, and hidden asset opportunities.

Phoenix, AZ
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