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The price of Ethereum (ETH), the world’s second-largest crypto by market capitalization, has been volatile this week. Global news headlines have whipped around prices, and ETH has fallen approximately 4% in the past 24 hours, slipping below $1,800 in early trading on Wednesday. There was a momentary spike higher on Monday after Hong Kong allowed retail investors to trade cryptocurrencies. But the gains were wiped out by the surprisingly strong April U.K. consumer price index report, which showed that inflation remains a big headache for Britain. The annualized U.K. April CPI reading was 8.7%, lower than March’s 10.1% year-over-year increase but well above consensus expectations. With global markets already on edge over the U.S. debt ceiling drama and uncertainty about the June Federal Reserve meeting, minor news items can spark outsized price volatility in crypto. { "symbols": [ [ "BITSTAMP:ETHUSD|1D" ] ], "chartOnly": false, "width": 800, "height": 400, "locale": "en", "colorTheme": "light", "autosize": false, "showVolume": false, "showMA": false, "hideDateRanges": false, "hideMarketStatus": false, "hideSymbolLogo": false, "scalePosition": "right", "scaleMode": "Normal", "fontFamily": "-apple-system, BlinkMacSystemFont, Trebuchet MS, Roboto, Ubuntu, sans-serif", "fontSize": "10", "noTimeScale": false, "valuesTracking": "1", "changeMode": "price-and-percent", "chartType": "area", "maLineColor": "#2962FF", "maLineWidth": 1, "maLength": 9, "lineWidth": 2 } Bitcoin (BTC), the world’s largest cryptocurrency by market cap, was down nearly 4% Wednesday morning, shedding a week’s worth of gains and dropping firmly back below $27,000. Other leading altcoins, Binance Coin (BNB) and XRP (XRP) were down even more. Featured Partners1UpholdFees (Maker/Taker) 0.95%/1.25%Cryptocurrencies Available for Trade 200+1UpholdLearn More On Uphold's Website2Crypto.comFees (Maker/Taker) 0.40%/0.40%Cryptocurrencies Available for Trade 170+2Crypto.comLearn More On Crypto.com's Website The Shanghai Upgrade Has Been Good for Ethereum The recent Shanghai upgrade has injected greater liquidity to the overall market for ETH. Hundreds of millions in staked ETH has been unlocked and returned to the market. Greater liquidity equals less price volatility, although as noted above markets have been fragile given concerns about the U.S. After dipping briefly below $2,000 in mid March, ETH move up as high as $3,000 as unlocked liquidity sloshed around in the market. in Shanghai’s immediate aftermath, it appeared that the Ethereum “exit queue” was working as expected, helping to control the amount of staked ETH withdrawn per day. In the weeks following the upgrade, there were record-breaking weekly inflows into ETH staking contract. Reportedly, the flows were driven by institutional staking services and investors reinvesting rewards after withdrawal. Ethereum Is a Risk Asset Like all cryptocurrencies, Ethereum is a high-risk investment. After an all-time high approaching more than $4,800 in November 2021, Ethereum is still down more than 60%, even after the cryptocurrency’s recent gains. High-risk investments like cryptocurrency can see tremendous price swings and extreme volatility, even compared with the tech-heavy Nasdaq, which is full of high-risk growth stocks. As a relatively new asset class, nobody knows what the future holds for cryptocurrencies as investment vehicles. Predicting their price moves is very challenging. Cryptocurrencies are also subject to hacks and future regulations, which may affect their overall value. The U.S. is still in the midst of deciding whether cryptocurrencies are securities, commodities or something else entirely. The eventual decision about cryptocurrencies’ status will affect how they’re regulated and who regulates them. If an investor chooses to invest in Ethereum, they should consult a financial advisor first and never invest more than they can afford to lose.
Read more: forbes
