The cryptocurrency market is filled with promising new networks. Many of them attempt to bring high scalability and low gas fees to the DeFi ecosystem. However, it’s undeniable that Ethereum still remains king in this space. Even with its shortcomings, it is still considered to be the #1 smart contract network with thousands of active projects.
In this article, we take a look at Ethereum, the second-most valuable crypto. We will analyze its fundamentals and try to provide you with an honest Ethereum price prediction. In the end, you should have sufficient information to decide whether ETH is a good investment.
A brief history of Ethereum
Ethereum’s mainnet was released in 2015, and its appearance on the markets disrupted the entire crypto industry. It implemented smart contracts, thus managing to considerably increase the number of ways blockchains can be used.
Until then, Bitcoin and other first-generation altcoins had a limited number of use cases — mostly, as a means of exchange for transferring value on the internet. Ethereum, on the other hand, functions as a global supercomputer. Developers can use self-executing agreements to deploy decentralized applications on Ethereum’s network.
Additionally, thanks to the ERC-20 protocol, Ethereum enabled the creation of new cryptocurrencies. This ultimately led to the ICO craze of 2017 and the subsequent crypto bull run of that period.
Moreover, another important protocol implemented with Ethereum is being actively used today – ERC-721. This has allowed us to create non-fungible tokens (NFTs), which have been a major catalyst for the crypto market’s growth in the past year.
And finally, it’s worth noting that Ethereum is a heavyweight in the decentralized finance (DeFi) ecosystem, which allows people to make payments without using a bank account. With more than 90% of all DeFi deployed on Ethereum, the ETH cryptocurrency has seen a skyrocketing increase in usage.
Two major updates in 2021
That said, the network has been experiencing some stark challenges of late. Ethereum’s proof-of-work consensus mechanism doesn’t allow the network to scale for mass usage. Users have been facing a saturated network, but more importantly, the fees have become extremely high, especially for small transactions.
However, there are major updates on the horizon that should improve, if not eliminate, these issues, namely:
- The shift to a proof-of-stake consensus mechanism. Currently, Ethereum is a mineable cryptocurrency that works on a PoW model. Because this scales poorly and requires large amounts of electricity, the network is switching to a more scalable, energy-efficient PoS algorithm. The shift should occur sometime during 2021-2022, which could be a major push towards a higher ETH price.
- The rise of DeFi. DeFi is seeing continuous growth, which initially began in the summer of 2020. With centralized exchanges being increasingly struck by regulatory crackdowns, this space should grow even further. As a major player in this ecosystem, this growth could have a positive effect on Ethereum’s price in the foreseeable future.
Ethereum in 2021
Before we give you an Ethereum price prediction, let’s recount ETH’s behavior over the course of 2021. This could give us some additional insight into future price action and allow us to understand market shifts more clearly.
Ethereum started 2021 on a strong note, with a nearly 70% price increase in just the first week of January. This bullish momentum continued all through February until the candles found some resistance at the $2,000 price level.
After struggling for a month to pass this level, Ethereum’s price rocketed at the end of March 2021. This fully-fledged bullish rally reached its peak in May 2021, when the price reached a new all-time high of $4,362, according to CoinMarketCap.
Unfortunately, this was followed by the May 2021 crash, when the crypto market lost more than 50% of its value. The bullish momentum switched to bearish, and the ETH price fell to a low of $1,739 in July 2021.
Bulls then retook control of the market and drove prices back up to $4,000, where candles met strong resistance. Since the beginning of September 2021, the ETH price has been in a pullback, now trending around the $3,000 level.
Before we draw a conclusion on whether Ethereum is still a good investment, let’s have a look at some experts’ forecasts about the ETH crypto.
- WalletInvestor is quite bullish on the ETH cryptocurrency. They place the token around $5,500 one year from now, which is an 80% increase. In a five-year time frame, they expect to see it as high as $15,000. This could put its market cap above $1trn.
- Coin Quora has an equally bullish view on the ETH price for the end of 2021, seeing it reach as high as $4,260. They expect the cryptocurrency to surpass its previous all-time high of $4,360 in 2022, reaching $5,500 by the end of the year. In the long term, their view is more conservative than WalletInvestor, with an ETH price of $10,500 by the end of 2025.
- TradingBeasts, on the other hand, have a more bearish view of Ethereum. For 2021, they give a maximum price of $3,289, with a minimum price of $2,236. Their long-term prediction is the most conservative on our list, with a max price of $4,051 per ETH token by December 2024.
Is Ethereum a good investment?
Ethereum is the token that managed to bring hundreds of use cases for blockchain technology and made NFTs and DeFi possible. With the switch to a PoS algorithm, the scaling woes of the network should become history. And once the #1 smart contract platform is ready to accommodate mass usage, we could see its price reach incredible heights.
Consequently, Ethereum is a long-term play that any serious crypto investor should have in their portfolio. It has been a game-changer in the past and will follow this path. This is especially true once transactions become lightning fast, cost-efficient, and eco-friendly.
That said, cryptocurrencies remain a risky investment. Ethereum developers need to deliver on their promises. Without clear improvements, we might see Ethereum being overtaken by competing platforms such as the Binance Smart Chain or Solana.
Founder Dinis Guarda
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