The cryptocurrency world has been going through a rocky time during the last couple of years, recording considerable price losses, dealing with the collapse of several noteworthy exchanges and then having to face stagnating prices. According to price tracking seen in Binance, no digital currency was free from the effects of these losses, including Ethereum, the biggest altcoin on the market based on market capitalization, an asset class that could be expected to deliver stronger performance. Unfortunately, the downswing tendencies of these few years were too strong, and it wasn’t until the beginning of 2024 that they appeared to have finally been overcome.
However, the hype didn’t last long, as the end of March brought corrections to the environment. Nonetheless, many investors were anticipating them, as this always happens in the crypto environment after an episode of considerable growth. The bad news is that while these corrections were initially believed to be shallow and unable to amount to anything in the long run, more recent data shows that they might remain set in place longer.
Rally
Leading up to the Dencun upgrade, Ethereum recorded a rally that took it to $4,091, a considerable climb compared to the previous levels that were significantly lower. Since then, the market has fallen into a trend of underperformance, and some investors blamed it on the steep growth that occurred seemingly overnight. Extensive growth is also followed by losses as well in the volatile crypto marketplace, and both occur more or less overnight.
The moment prices began rising, investors started discussing the intricacies of a bull run, as well as the best strategies that should be adopted during times like this. Navigating the cryptocurrency market can be challenging, especially if you’re a newcomer to the market. Making sense of all the price variations and changes can be close to impossible, especially considering the fact that the market doesn’t follow any rules and is completely decentralized. That means that price movements are affected by many different factors, including investor engagement, macroeconomics and worldwide events.
Nonetheless, investors must be prepared for any changes that may occur since they could impact portfolios and transactions. As such, your strategy must be solid but allow room for flexibility at the same time in order to bring you revenue.
ETH/BTC
The connection between Ethereum and Bitcoin remains a topic of ample debate in the cryptocurrency sphere, with some believing Ether has the potential to surpass the king of crypto with sufficient effort, while others think that there’s no way this scenario could become a reality. While the former has been focused on innovation, development and growth since the beginning, Bitcoin was far more traditional, acting chiefly as a coin and only recently delving into introducing new tokens like the Ordinals.
Throughout March, the ratio between Ethereum and Bitcoin has been trending lower, reaching the lowest levels recorded since January. But what are some of the reasons why ETH has been dealing with trouble throughout March? The decline in consistent network activity is one of the reasons, according to recent data and figures, with the number of daily addresses dropping considerably from 622,963 to 546,484 in the span of just six days.
The fact that Bitcoin is going through an intensely strong period is also noteworthy, with the spot ETF approval and the upcoming halving providing the digital gold marketplace with a lot of power. Although any changes in the Bitcoin environment reverberate through the entire crypto sphere, there is no doubt that the first market environment to benefit will still be Bitcoin itself. What’s more, if Bitcoin continues growing and covers an increasingly large part of the market, it will naturally have effects on the rest of the environment as well, causing the altcoins to shrink in response.
1M
It’s not all doom and gloom on the Ethereum market, though, and there are several reasons why investors should be optimistic about the market’s evolution. One of them is the recent spike in the number of validators on the Ethereum blockchain. The community reached the one million mark in March, and the effects are expected to become visible right away, with increased security being the first and foremost of them. At the moment, the number of staked ETH coins has also climbed to a staggering 32 million, or $114 billion. However, given the speed at which market prices tend to change, there’s no guarantee that these values will remain the same in the long run.
Validators ensure that the blockchain and trading environment remain safe by monitoring network activity in order to uncover the emergence of any malicious transactions that could have found their way into the system. Double-spending is one of the most common problems, something that happens when the same currency is spent multiple times despite having the same tender. This troublesome occurrence is a unique flaw of the cryptocurrency market and reflects some of the challenges that come with achieving consensus when you operate outside of centralized authority.
The Ethereum validators both propose and validate transactions across the blockchain network, and anyone who wants to become a part of the process must stake the 32 ETH coins required to join the ranks. All the users get a small amount of Ethereum as a reward, and while many ETH investors are glad to learn that the number of investors has grown, there are also some who believe that this could become a potential problem. The reason is that there might be a time when there’s simply too much staked Ethereum for the market to operate adequately.
Ethereum’s Outlook in 2024
There is also a risk of failed transactions, whose number might become more elevated in the near future. Others believe that the number of validators the records show has been artificially inflated by the 32 coins cap and that they are bound to change soon. At the same time, Vitalik Buterin released a blog post in which he proposed issuing penalties on validators as a way to support the network’s intrinsic decentralization. The sanctions would be offered with the average failure rate of the validators, but if many happen to fail in a given slot, the penalties will be much higher overall. This approach is expected to minimize some of the advantages large stakers possess over those with modest holdings.To sum up, the Ethereum marketplace will most likely have a challenging time in 2024 as well, but most investors believe the impact will be considerably reduced compared to the previous years. The crypto market is more mature now and able to withstand difficulties more efficiently.
