Ethereum is the second-largest cryptocurrency globally, second only to Bitcoin both in market capitalization and popularity. Since its initial offering, Ethreum has risen by over 1000%.
With Bitcoin's entry into the mainstream thanks to increasing institutional interest, 2020 was a good year for the cryptocurrency market. Ethereum also had a solid year in 2020, giving investors 4.5x the returns.
Ethereum hit its all-time high of $1456.26 on January 25, 2021, and is set to appreciate even further. Let's look at the Ethereum price prediction and see how the cryptocurrency is predicted to perform over the next few years.
What Is Ethereum?
Ethereum is a blockchain-based, decentralized platform. Founded in 2015 by Vitalik Buterin, it enables smart contracts and decentralized applications (dApps) to be built and deployed on the platform. The platform runs these apps and contracts without any downtime, fraud, or interference from third parties. Since the platform is decentralized, users can still execute transactions and smart contracts on the platform even if part of the network goes down.
Ethereum aims to decentralize the client-server model, replacing central servers with thousands of nodes operated by volunteers worldwide.
Smart contracts run the Ethereum ecosystem. They are lines of code stored on the blockchain. The contracts are executed automatically when certain predetermined conditions are fulfilled. The smart contracts are enforced by the Ethereum blockchain, which acts as an unbiased third-party to transactions on the blockchain.
Ethereum Price History: A Look At Ethereum’s Past Performance
Ethereum has experienced some volatility, just like other cryptocurrencies. However, over the long-term, it has been one of the more stable cryptocurrencies. Let's check Ethereum's price history in a little more detail.
Ethereum experienced a significant rise in valuation between May 17, 2017, to June 20, 2017, when the price of ETH rallied from $90 to $364. Post this price rise the currency faced a period of volatility before appreciating again in mid-December. Ethereum crossed $500 on December 13, reaching $730 by mid-December.
By the end of December, the cryptocurrency was trading at around the $800 mark. It crossed $1000 in January but fell back to $750 in February. Ethereum saw a gradual decline in its price from May 2018 until December 2018, when the value dropped to under $100.
By December 2020, Ethereum was trading between $500 to $750, maintaining its position between the two price bands. Between January 1 and January 9, Ethereum rallied from $730 to $1288. This set the stage for Ethereum to break its previous record of $1439.33, and the cryptocurrency hit an all-time high of $1456.26 on January 25, 2021.
According to the Ethereum price prediction, Ethereum will continue to see an increase in price in 2021. Some predictions state that the cryptocurrency will continue to push higher and beat its high-price of $1456.26 soon. No matter what the price prediction, it has outperformed Bitcoin this year so far.
Ethereum Price Prediction 2021: Will ETH Really Reach $3,000?
Yes. According to the Ethereum price prediction, ETH is set to experience a bull run in 2021 and the price of Ethereum could reach $3,000 mark. Being the platform of choice for DeFi projects, Ethereum will be the best stablecoin for the long haul. With the initiation of Ethereum 2.0, Ethereum's scalability issues are addressed, with the platform able to process 100,000 transactions per second, making the platform more efficient and accessible.
4 Significant Factors To Consider
An accurate prediction of the price of cryptocurrencies is difficult as the price changes depending on market conditions. However, we can look at the factors while making the Ethereum price prediction. Here are four significant factors to consider.
1. Cryptocurrency Guidance For Banks
The Office of the Comptroller of Currency (OCC) hopes to have more regulatory guidance to help traditional banks embrace cryptocurrency and enhance efficiency. The OCC recently published Interpretive Letters 1174, clarifying that banks can now have custody of cryptocurrency and stablecoins.
It also explains that banks have the right to utilize new technologies, including independent node verification networks (INVNs) and stablecoins, which will help them perform bank-permissible functions such as payment activities.
In addition to the authorization for national banks and federal savings to provide cryptocurrency custody services for customers, the OCC also provided the right to hold unique keys associated with digital currencies. This has allowed banks to issue stablecoins, exchange stablecoins for fiat currency, and validate, store or record transactions by serving as a node on a blockchain (INVN).
For the ETH community, this is indeed a piece of big news because stablecoins are Ethereum tokens that stay at a fixed value, even when the Ethereum price changes. ETH can be leveraged as a network infrastructure by facilitating these stablecoins.
2. Ethereum 2.0
Ethereum 2.0 or Serenity has been a long-anticipated, much discussed, and significant step following past upgrades. This is because it implements a Proof-of-Stake consensus mechanism, moving away from the existing Proof-of-Work consensus mechanism. The upgrade will be released in a phased manner, with the first phase released in 2020. Each upgrade aims to improve the functionality of Ethereum.
The biggest advantage of Ethereum2.0 is that it will bring considerable improvements to scalability, security, and accessibility. It can enable Ethereum to conduct up to 100,000 transactions, compared to Ethereum, which can only support 30 transactions per second. This will eventually improve efficiency and reduce delays caused due to network congestion. The transactions are handled in parallel chains rather than consecutive ones so that the implementation of shard chains speeds up the network and increases scalability.
3. The Stimulus Package
Jehan Chu, the managing partner at Hong Kong-based crypto investment firm Kenetic Capital, told CoinDesk, "The Biden stimulus may add an extra jolt to bitcoin's price, but nothing more than pushing along a barreling freight train."
The new POTUS plans to release a new economic stimulus package. The stimulus package would see an additional $1400 sent to eligible recipients. This is in addition to the $600 approved by Congress in President Trump's tenure, which means recipients would receive a total of $2000.
Bitcoin's price received a significant boost thanks to government stimulus measures in 2020, which saw the cryptocurrency reach record highs, higher than what we saw in 2017.
We can expect a similar reaction by cryptocurrencies with the US's announcement of the new stimulus package.
4. Increasing Institutional Interest In Ethereum
According to Coinbase's annual review for 2020, more institutional investors see Ether as an important store of value. A growing number of institutional clients have taken Ether positions for its stronger returns, as noted by the crypto exchange.
2021 will be a significant year for Ethereum. It is predicted to become a favourite among institutional investors. The soon-to-be-launched suite of Ethereum-focused funds aims to provide exposure to ETH, the native currency of the Ethereum network, through a high-security vehicle structure.
Read More: What Will Drive The Ethereum Price In 2021?
Ethereum Price Prediction 2021: What Are Some Strong Support and Resistance Levels?
Image: ETH/USD monthly
If we look at the monthly chart for Ethereum price, then we can see that ETH/USD has had its most bullish month ever this January, and it seems like there is more to come. As you can see, the 20-bar SMA has crossed over the 50-bar SMA in this timeframe to form the bullish cross pattern.
While the ETH price has since retraced from its all time high, we can expect ETH to cross over the $1,475 resistance and break above the $1,500 psychological level. On the downside, there is a very strong support at $1,100 which should ideally prevent any downward movement for ETH price.
Ethereum Price Prediction: Conclusion
According to the Ethereum price prediction, ETH could be set for a record-breaking year in 2021. We will see Ethereum push past its previous high as it settles for a period of sustained growth due to more projects choosing Ethereum as the platform to launch their projects on, Ethereum 2.0 and DeFi gaining more popularity. Ethereum should be high on your investment list as you can enter at a competitive price, take full advantage of the bullish sentiment and make a significant return on your investment.
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