Let's boldly speculate what this breakthrough means. The $4500 mark is like a hurdle; Ethereum has tried several times to surpass it before without success. This time, breaking through is akin to setting a new record in a race that has never been surpassed, indicating not only strong momentum but also potentially attracting more buyers, pushing the price further up. If it can stabilize, the next target could be the high point near $5000 from 2021. If it cannot hold, a drop to $4000 to $4200 should provide some support.
Why has it increased so much? My personal analysis is as follows: From the perspective of supply and demand, the amount of Ethereum on exchanges is decreasing, currently at only 8.9 million coins, the lowest in nearly a decade. This is like a market where a product is in short supply; if there are many buyers, the price naturally rises. Many people are storing Ethereum to 'earn interest', with over 32 million coins currently being handled this way, and this number may increase in the future. ⚠️ Additionally, Ethereum has a mechanism to 'burn' a portion, making it increasingly scarce and thus more valuable.
Next, let's consider its own 'strength.' Ethereum has been upgrading; the recent upgrades have enhanced its transaction processing capabilities and significantly reduced costs. It’s like a road that used to be very congested but has now been widened; as more people use it, the road's value increases. More and more applications are running on Ethereum, leading to greater demand.
Another factor is the entry of large funds. Many large institutions and companies have started buying Ethereum. The Federal Reserve has also hinted at the possibility of lowering interest rates, leading people to feel that investing in such potential assets is better than keeping their money elsewhere, which has also boosted Ethereum's popularity. However, we must not let our guard down.
In fact, many people are currently borrowing money to buy Ethereum, but I really don't recommend using online loans to get into the crypto space. It is understandable to want to make quick money and improve your life, but you need to consider whether you can bear the unknown risks and if you have the ability to repay.
Moreover, regulatory policies may change. If new regulations are introduced to restrict it, the price will also be affected. Additionally, there are other similar cryptocurrencies in competition, which may divert some attention and funds.
So what should ordinary investors do? If planning to hold long-term, it might be wise to buy some when the price drops to $4200–$4300, and consider selling part of it when it rises to around $4800. If looking to operate in the short term, now that it has just broken through $4500, those with a high risk tolerance can buy a small amount, sell at $4650, and set a stop-loss at $4400 if it drops. Those holding Ethereum can also take some actions to hedge and buy themselves 'insurance' against a significant price drop.
Overall, the recent price increase of Ethereum is due to a combination of multiple factors. There might be some fluctuations in the short term, but in the long run, as long as it continues to develop well, there is still room for price increase. When buying, everyone should pay close attention to price changes and various news, and avoid blindly following the trend!
