Ethereum, the second-largest cryptocurrency by market capitalization, has seen its price decline by 2.36% over the past 24 hours to $1,588.07. This price drop comes after a period of sideways trading for Ethereum, which has struggled to break out above the $1,600 level over the past week.

Ethereum's market capitalization now stands at $191.25 billion, still firmly in second place behind Bitcoin. Trading volume over the last 24 hours was $3.4 billion, suggesting that interest and activity around Ethereum remains strong despite the recent price weakness.

Digging deeper into the price action, Ethereum has now fallen 2.23% over the past 7 days. The declines have been gradual rather than sharply volatile. This indicates an overall trend downwards rather than any major panic selling.

Over the last month, Ethereum has dropped 4.95%. Over the past 6 months, losses have amounted to 12.15%. This shows that the major cryptocurrency has been stuck in a prolonged bear market throughout 2022. However, the downside momentum has slowed, pointing to the potential for consolidation around current levels before any renewed uptrend.

What's Behind the Latest Ethereum Selloff?

Ethereum's latest selloff appears to be connected to overall weakness in cryptocurrency markets rather than any Ethereum-specific factors. Bitcoin has also traded lower over the same time period, falling 3.5% over the past 24 hours.

Sentiment towards risk assets like cryptocurrency remains fragile given the current macroeconomic environment. Surging inflation and rising interest rates have squeezed consumer budgets and led to falling asset prices across global markets.

Cryptocurrencies have struggled to decouple from this broader macro downturn. Without a clear catalyst like lower inflation or a pause in rate hikes, sentiment is likely to remain weak. Ethereum is no exception, drifting lower despite no major changes in its development or functionality.

However, it is worth noting that Ethereum has shown some relative strength compared to Bitcoin and other altcoins which have experienced even steeper declines over the same time frame. This is likely due to Ethereum's dominant position as the leading blockchain for decentralized applications and NFTs. The ongoing transition to a proof-of-stake consensus model is also supporting Ethereum's market position.

What's the Outlook for Ethereum for the Rest of 2022 and 2023?

Looking ahead, it is likely that Ethereum will remain stuck in a wide trading range between roughly $1,300 and $1,800 for the rest of 2022 barring any unforeseen catalysts. Near-term trading will likely be driven by broader macro conditions and Bitcoin price action rather than fundamentals specific to Ethereum.

However, the longer-term outlook remains bullish. The transition to proof-of-stake is expected to unlock Ethereum's scalability, reducing transaction costs and supporting further adoption. Competition from rival smart contract blockchains has so far failed to make a major dent in Ethereum's dominance.

The growth of Web3 and the metaverse is also likely to drive increasing utility and demand for Ethereum's blockchain over the next 1-2 years. Major corporate partnerships and NFT projects built on Ethereum reinforce the positive trajectory.

As such, a return to the all-time highs above $4,000 can be expected at some point in 2023 assuming macro conditions improve and the next Bitcoin bull market gets underway. Patience will be required, but Ethereum remains one of the most promising blockchain projects with tremendous development momentum. Dips can be viewed as longer-term buying opportunities.

Will We See Sub-$1,000 Ethereum Before New Highs?

Many cryptocurrency investors and analysts are debating whether Ethereum could drop as low as $1,000 before entering the next sustained bull market. Around this psychological level, Ethereum found strong support during the summer lows.

However, given that Ethereum has already declined approximately 70% from its all-time high, the downside risk appears somewhat limited from current levels around $1,600. Unless macro conditions severely deteriorate, Ethereum looks unlikely to test below $1,000 over the next 6-12 months.

While short-term bounces to $1,750 or $1,850 may occur, the path of least resistance is currently to the downside until the Fed pivots on monetary policy. But Ethereum's fundamental strength suggests that dips below $1,300 are likely to be bought aggressively, limiting downside.

Therefore, while a wick down to $1,000 is possible, it would likely be short-lived. Expect Ethereum to find a bottom between $1,200-$1,400 in this bear market before powering to new highs above $4,000 in 2023-24.

Is Ethereum Still a Good Long-Term Investment?

Despite the ongoing bear market conditions, Ethereum remains one of the best long-term investments within the cryptocurrency space. As the dominant smart contract platform, Ethereum provides profitable utility that is becoming more entrenched each day within the Web3 ecosystem.

While scaling issues have limited adoption, the move to proof-of-stake will enable Ethereum to onboard new users and applications. Real-world usage should dramatically expand over the next 3-5 years as gains mainstream traction.

Meanwhile, most "Ethereum killer" projects have failed to gain anywhere near the developer activity or network effects enjoyed by Ethereum. Its first-mover advantage continues to provide it with a tremendous lead over potential competitors.

Therefore, Ethereum still appears significantly undervalued relative to its potential at current prices around $1,600. Value investors and long-term believers would be well-served accumulating positions during periods of fear and negative sentiment.

Once the macro backdrop improves, Ethereum could power to new highs within the next 1-2 years, generating enormous upside from current levels. Patience and a long time horizon are critical, but Ethereum remains a core portfolio holding for crypto investors.