Ethereum, the second most popular cryptocurrency in the world, went through a difficult time in 2022, with prices plummeting quite severely, especially considering the previous year's all-time high levels. However, investors claimed that things will soon take an upward turn and that cryptocurrencies will bounce back soon enough. And they weren't wrong, as January 2023 ushered in the beginning of a new trend that helped the Ethereum price regain its strength. Exchanges such as Binance also began to see more engagement from crypto users who began work on their portfolios again.
However, progress isn't linear, and the crypto faced additional pressure from regulators and lawmakers. This caused prices to stagnate, as many essential coins failed to gain momentum and secure their growth. Yet, investors remain convinced that things will change and that the current episode is only a temporary inconvenience.
Liquid Staking Tokens
The Liquid Staking Tokens also referred to as LSTs, are minted every time a user stakes tokens through the means of a liquid staking protocol. They represent ownership over the assets, as well as any other network rewards that are earned through participation. Recently, they have become more popular, a movement which, according to analysts, could signal the beginning of a new age for Ethereum. It might also play a significant role in the bull market.
Since the Ethereum Merge, the market has recorded continuous growth and is now estimated to be worth a staggering $17 billion. A considerable number of investors are almost convinced that LSTs will eventually replace ETH on its native blockchain sooner or later. Many traders are drawn in by the advantages of liquid staking tokens, which will likely become even more transparent for liquidity providers.
The new blockchain functionality that allows users to stake Ether coins has created the possibility of different strategies. One of them is to stake coins and construct a definitive yield, while the other is to provide liquidity to earn fees. But, for an increasing number of investors, the first option is gradually beginning to look safer and more profitable. Staking allows a roughly 4% yield annually, but that can vary depending on other factors such as network activity, the amount of ETH staked, as well as the maximum extractable value.
LST transition
There are many who would be quick to argue that Ethereum is still Ethereum and that as one of the most noteworthy cryptocurrencies in the world, it is unlikely that it could ever be ousted from its position. Yet, other investors seem to believe that it's essential to remember that the digital finance market is rapidly evolving. It has always been characterized by development and innovation.
The Ethereum landscape, in particular, has been particularly noteworthy for the changes it brought to the cryptocurrency environment. It pioneered the concepts of decentralized financial services and applications. It is also the creator of non-fungible tokens, which created a legitimate craze in the late 2010s and often sold for millions of dollars. The Bitcoin Ordinals are directly inspired by NFT technology.
As such, it's worth remembering that this community thrives on development and efficiency. If investors can be convinced that LSTs offer a superior experience, that could spell trouble for Ethereum. The transition might come swiftly, especially given the market potential of liquid staking tokens. Especially since users are becoming more familiar with staking and unstaking coins when they see fit, they'll also become more comfortable with liquid staking platforms.
LSTFi
The beginning of this trend has already been observable since the introduction of the Shanghai upgrade. Many believe a takeover would be a positive thing for the industry, as there's been a slowdown in engagement levels in the aftermath of the crypto winter. A new dominant asset could rejuvenate interest and attract new users. Nonetheless, this isn't the end of Ethereum. In fact, it's possible that the predictions regarding the rise of liquid staking tokens could be exaggerated or even entirely wrong.
Ethereum is still the better-known asset, the one that's more familiar to users. That's not easy to replace. Moreover, it has established a reputation for itself as a reliable and overall stable asset. This is no small feat in the world of digital finance, where most cryptocurrencies experience considerable fluctuations, leaving many investors with the best strategy they should adopt when it comes to growing their portfolios.
What's more, there have been many trends in cryptocurrencies in the past. All made big claims, and there was considerable discussion about how they could revolutionize or even completely change the market. None of these predictions became true, and powerful coins like Ether or Bitcoin maintained their positions as market leaders.
Price issues
Now that a bullish trend is underway, many investors are focused on how the prices change. While the cost of Ethereum decreased since July 14th, it is still uncertain how things will progress in the future. However, most investors are convinced that the price point has reached the bottom, from which the only way to go is upward. There's also the possibility that while this shift may not have occurred yet, it will relatively soon.
That's because investors are not yet sure whether or not Ethereum has completed its price correction. Since that's not yet fully understood, it might be that another low point will soon follow. According to the Fibonacci retracement levels theory, any type of price change also means there will be a return to previous levels. If you choose to move forward with the possibility that the correction has already been completed, then the most probable outlook is the one that records an upward movement of nearly 10% compared to the current levels.
That would mean returning to the July high points and finding support at the $2,000 range. But some believe ETH could fall even further and get to $1,780 before it starts climbing back again. The only thing investors can do is to be prepared for either scenario so that neither takes them by surprise and finds them and their portfolios unprepared.
Ethereum has been going through a rough patch, and while it seemed that 2023 would bring considerable changes quite quickly initially, it hasn't yet been the case. In fact, crypto is still dealing with some problems and is still trying to regain its previous strength. Both investors and analysts are convinced this will undoubtedly happen sooner or later.
