The evolving use cases of Ethereum significantly increased the price of ETH in 2021. So what awaits Ethereum in 2022? The increase in ETH’s value paralleled the upgrades to Ethereum’s core protocol, marking an important step towards its transition to the proof-of-stake consensus protocol in 2022.
Ethereum (ETH) Overtakes Bitcoin in 2021
Certain Ethereum Improvement Proposals (EIP) have been the focus of attention for the wider Ethereum community and have proven crucial to “The Merge” with the Proof-of-Stake Beacon Chain set to take place in 2022. The London hard fork was the most anticipated upgrade introducing a handful of EIPs. EIP-1559 has been contentious due to changing fee structures earned by miners and paid by users, and there were both positive and negative aspects to the upgrade.
A key factor was the built-in ETH burning mechanism, which destroyed a portion of Ethereum used to pay a transaction fee. While some miners were unhappy to see a drop in fees, the upside of the London hard fork was the deflationary effect of the ETH burning mechanism. It is believed that this EIP and deflation mechanism will help increase the value of ETH in the months and years to come.
Ethereum, which was at $ 700 at the beginning of this year, reached the $ 5,000 limit towards the end of the year. Improvements in the network, increased use of DeFi and NFT benefited Ethereum the most.
2022 Ethereum Price Target
Ethereum’s evolving use cases led to an increase in the value of ETH in 2021, but what awaits Ethereum in 2022?
December was tough for global markets, which reacted sharply to the discovery of the latest COVID-19 variant identified by South African researchers. This situation, which suppressed traditional markets, also affected the crypto money ecosystem. BTC, ETH, and a number of major cryptocurrencies took losses as that sentiment spread to crypto markets, and more bad news came as inflation rose in the US. The markets are still extremely fragile and as 2021 leaves behind, Bitcoin and Ethereum continue to fall.
So how many dollars can Ethereum be in 2022? First of all, there is no significant drop in network activity, and there is less Ethereum in circulation than it should be. In the next year, this will continue and we will probably experience more deflationary days. Of course, this will contribute to the valuation of ETH. With the initial price target of $5,000 quickly surpassed, many investors believe the psychological resistance of $10,000 will be overcome.