Ethereum’s value has had dramatic falls in the past, such as the one that occurred in early 2018. On the occasion, ETH’s value remained low until its up-climbing recovery in June 2024 (almost 2 years after).
A famous quote states that “those who cannot remember the past are condemned to repeat it”. In this sense, crypto investors would be wise in taking a look at Ethereum’s history to learn how to react in case a dramatic fall happens once again.
This is likely with all the cryptos once the bullish market cycle finishes. So it doesn’t matter if you buy bitcoin, ETH, ICX, ARK, etc. – make sure to cash out the profits before they crash.
The Origin of Ethereum
Considered by many people as “Bitcoin’s shadow currency”, Ethereum is the most prominent of the crypto underdogs. Sometimes called Ether, the digital currency is the second-largest cryptocurrency by value.
Launched back in 2015, Ethereum’s value lies in its smart contract functionality and clever design. Offering many possibilities for both crypto enthusiasts and investors, Ethereum smart contracts permitted the creation of DApps (decentralized applications) and the rise of DeFi (Decentralized Finance).
Following an initial fundraiser, Ethereum was launched and 72 million coins were minted and distributed to the initial founders of the project.
Ethereum was the first crypto network to structure its functionality around the concept of decentralization. While there is a central organism that created the network, they do not hold authority over the miners, who are a crucial part of ETH’s decentralization.
DAO Hack and Subsequent Changes
In the following year (2016), the network was exposed to one of the most famous hack attacks in the history of cryptocurrency. The DAO hack, as the situation was named, showed the world the risks associated with digital money.
At the occasion, specialists pointed out many gaps and loopholes that could have exposed many other actors in the network, including other DAOs (Decentralized Autonomous Organizations), token holders, exchanges, miners, nodes, and the Ethereum Foundation itself.
Consequently, since the DAO event, the protocol has been gone through several changes. One of the most significant changes was the implementation of hard forks, which can be understood as planned or unplanned changes in the protocol.
The last planned fork is still occurring in 2024 with the implementation of ETH 2.0, which presented the world with the new layering of the Ethereum protocol to allow faster processing times, higher processing power, more interoperability, and fewer fees associated with the process.
Ethereum’s Dramatic Price Fall
Since cryptocurrencies (especially BTC) have established themselves as a valuable-yet-unstable type of investment, many specialists are constantly predicting some type of collapse of a speculative bubble surrounding the crypto market.
Indeed, things do not go as expected sometimes, especially when it comes to cryptocurrency. In 2018, the crypto industry suffered a major setback, which included a vast sell-off of cryptocurrencies.
On the occasion, BTC prices fell 65%, shocking the whole crypto industry. Following the negative tendency, Ethereum price went all way down as well. Through the rest of the year, cryptocurrencies collapsed 80% from their peak in January 2018. You can find the latest cryptocurrencies prices with Paybis.
Ethereum fell from an early-year high of $1,300 to just $91 by December 2018. Accordingly, some experts considered the 2018 cryptocurrency crash worse than the dot-com bubble collapse back in the ’90s.
At that time, Ethereum’s co-founder Vitalik Buterin tweeted a notice remembering users that “cryptocurrencies are still a new and hyper-volatile asset class and could drop to near-zero at any time. Don’t put in more money than you can afford to lose.”
Eventual Price Recovery
ETH is shining once again with a new ATH over $1600 USD, with the expectation to go beyond $2000 USD – talk about a recovery!
Several factors helped to bring Ethereum to the spotlights once again, which includes:
- The increasing popularity of DeFi (Decentralized Finance)
- Updates such as ETH 2.0
However, for ETH to truly shine, they need to fix the latent issues such as extremely high fees and slow processing of transactions.
DeFi and NFTs
Apart from the reasons mentioned above, we believe that the recovery of Ethereum is also linked with its popularity in the DeFi space. While there is massive demand in the NFT markets at this time, an issue which increased gas fees massively, we believe that the eventual development of Layer 2 protocols will help the token outperform Bitcoin.
In more detail, we are now seeing Ethereum act as a foundation for the soon-to-arrive Metaverse, a concept that has long been discussed amount visionaries. The development of virtual worlds and economies is now possible due to decentralized financial systems that help communities enforce democratic principles without the need for trust in external parties. We expect this trend to continue in the years to come, bringing Ethereum to a 5-figure pricepoint.
Despite the ever-growing demand for alternative and decentralized solutions involving blockchain, predicting Ethereum’s future is still a game of blindfold. However, we are bullish about it.
Still, it is not recommended that individuals without proper crypto knowledge participate in the process as a way of making “easy money”, given all the risks and volatility to which investors are exposed – only invest what you can afford to lose!
Nonetheless, it is plain to see that ETH 2.0 and the evolution of DeFi will enable users to find and pursue infinite opportunities within a cross-chain ecosystem. The fundamental changes brought by ETH 2.0 will act as Ethereum’s fuel to drive it towards an increased role in the cryptocurrency industry.