What is the future of Ethereum after its rise in 2021?
Ethereum is the second most famous cryptocurrency after Bitcoin. In the interest of launching the long-awaited Ethereum 2.0 standard in the coming months, many people are wondering what the future of Ethereum is. And how exactly will your native currency, ether (ETH) perform.
So far, there are valid reasons to believe that expectations for Ethereum will be mostly favorable for the next few years. But they will depend on the dominance of ETH in terms of market capitalization, its popularity, the liquidity of the value of the network, which would even have to surpass that of Bitcoin.
Building on its previous performance and increasing adoption of the Ethereum blockchain, the price of ETH is projected to maintain its upward trajectory as ether ranks second to bitcoin, with a capital of $ 20 billion and $ 12 billion in daily trading volume. Many are expecting a breakout point for ETH from Ethereum's status as the first and only general-purpose blockchain.
What is Ethereum?
Ethereum is an open source digital asset launched in 2015, developed on a decentralized platform. Today, it is one of the cryptocurrencies available that enables the revolutionary functionality of creating and running smart contracts and decentralized applications (DApps). These functionalities allow any application, process, transaction or mechanism to be executed in an agile way. This is useful for the elimination of fraud, control or third-party interference on the Ethereum blockchain .
Ethereum has its native programming language, which allows developers to create and launch distributed applications. The possible applications of Ethereum are practically endless. The cryptocurrency of Ethereum is called ether and it is the second cryptocurrency by market capitalization after bitcoin, but its structure is different, since it can execute code of any algorithmic complexity. This marked a revolutionary step in the advancement of distributed technology,
as it established Ethereum as the first general-purpose blockchain.
Hindsight: ETH growth and projections
Several factors affect the price of ether and have contributed to its stable growth since the birth of the Ethereum blockchain. Ethereum was created with the goal of being much more versatile than the Bitcoin blockchain. It enables smart contracts, powerful tokenizations, complex decentralized applications, and decentralized fundraising campaigns.
The initial coin offerings (ICO) boom in 2017 saw ether being used as the main funding mechanism for crowdfunding projects. As most of the projects were using Ethereum's ERC-20 standard for their tokens, speculation about their tokens grew, and so did the price of ether. Although many are still unsure of the future of Ethereum, these are ETH's forecasts for the next few years.
ETH All-Time High:
On January 10, 2018, the market saw ether reach its all-time high of $ 1,412. It wasn't until 2020 that ETH entered the bull market back and hit the all-time high of $ 1,958 on February 20 per unit (ETH).
If we look at the growth charts, the pattern of Ethereum as a cryptocurrency is more impressive than that of Bitcoin. In turn, the trend tends to remain the same.
ETH collapse
In 2019, following a big bitcoin crash, the price of ETH also plummeted, causing the unit price to drop to the $ 132 level. The latter marked a 30% loss in the value of the cryptocurrency, while the market capitalization of the value coin remained at levels of $ 13.98 billion.
Despite the nosedive, ETH managed to find some support. Indeed, there are expectations that it will enter the bull market after the collapse and that it will skyrocket back when the altcoin season begins.
What revolves around ETH in 2020?
The year 2019 was truly decisive for Ethereum in terms of advancements, achievements and the growing popularity of its decentralized applications or DApps in the current market.
Despite the fact that there were no significant changes in the price of ether (ETH), the cryptocurrency was able to begin to recover from its repeated and deep sell-offs that took place in 2018.
We are now heading to 2020, and Ethereum has reclaimed its status as the 'world's best platform for smart contracts to date'. Several factors explain this, such as the global COVID-19 pandemic and the resulting economic recessions. Meanwhile, decentralized finance (DeFi) has given rise to decentralized autonomous organizations (DAO), which influence ETH prices. For all these reasons, ETH has several advantages, possibly in the short, medium, and long term.
Also, there is the much-anticipated rollout of Ethereum 2.0 scheduled for late 2020. In the first phase of the update, Ethereum will begin to use a consensus mechanism of proofs of stake ( Proof of Stake or PoS), which will allow holders of ether to use your ETH to run the network ( stake ). By locking their ETH on the blockchain in exchange for block rewards, ETH stakers can benefit from annual returns. Ultimately, it will also improve the speed of the Ethereum network.
What is the price of ether today?
The development of Ethereum started 2020 with a value of $ 130 per coin, but its value continued to rise as the cryptocurrency market as a whole went higher. The first significant price escalation came during the month of February, after it reached $ 279 per unit. Once it broke through the resistance levels, ETH managed to trade above $ 500 per unit. This was because Vitalik Buterin gave the crypto community security through the scheduled launch of phase 0 of Ethereum 2.0. In November 2020 ETH was trading around $ 590. Today, March 18, 2021, each unit of ETH costs $ 1,905.
The huge rally in the value of ether was due, in part, to growing interest in the cryptocurrency sector and the sudden rise of bitcoin.
The impact of DeFi on the price of ETH
In less than a year and a half, the amount of dollars locked as crypto collateral in DeFi has grown to almost 300%. Ethereum, the mainstay of this new financial ecosystem, currently has 2.5 million ETH blocked on the network, which represents 2.25% of the total supply.
While 2020 saw the world go through economic crises due to the global coronavirus pandemic, decentralized finance markets were able to withstand the economic storm to a great extent. This may mean that this new financial landscape could significantly impact Ethereum, more than the ICO in 2017.
As DeFi reached new major milestones in May 2020, the number of new DeFi assets reached 1,000. The result? The user base reached an all-time high of about 200,000 during the first month. Currently, DeFi has taken the form of a complete financial ecosystem, and the total fixed value is climbing above $ 7 billion in stablecoins . Half of that value is locked on the Ethereum network in the form of ERC-20 tokens,
while the correlation between DeFi and Ethereum remains high, as the Ethereum 2.0 launch is imminent. The cryptocurrency is expected to get the necessary momentum thanks to DeFi-locked tokens.
ETH price analysis
In November 2020 the price of ether has been trading in a positive zone above $ 450 against the US dollar. According to ETH / USD projections, the value of the cryptocurrency could accelerate back even further, on the condition that it does not fall below the $ 440 resistance line.
Even though there is some degree of volatility in price movements, since the beginning of 2020, Ethereum has broadly been following an uptrend. A brief correction to the downside of $ 374 was recorded on November 6. The value of ETH has since followed a bullish move to hit $ 465 on November 7 before registering a slight slowdown to the low of $ 435 the next day. At the time of this writing, the ETH price is above $ 1,900 and almost reaches its all-time high back.
The future of Ethereum regarding its scalability and earnings
Another critical factor influencing the adoption and popularity of Ethereum has to do with its integration standards, which facilitate the integration of the Ethereum network. With that being said, the Ethereum network has long been plagued with scalability issues due to increased network usage. This caused the network to be heavily congested, so the average transaction fees have risen considerably.
The Ethereum 2.0 update is expected to resolve current scalability issues.
According to Ethereum founder Vitalik Buterin, "The network is looking forward to the future of Ethereum scalability," which includes sharding to be released with the Ethereum 2.0 update.
The new shard functionality will speed up second layer protocols up to 100 times.
This, combined with the relationship between Ethereum and DeFi, is likely to exponentially increase the profitability of ETH. Of course, this will happen as long as the DeFi space does not exceed Ethereum's capacity and they decide to move to a different blockchain.f
Meanwhile, the value of Ethereum will continue to rise. This is due to the growing utility of cryptocurrency, which must then increase in value against fiat.
Upcoming Ethereum Projects
Five years after it was launched, Ethereum remains the world's largest general-purpose blockchain. To date, some 200,000 active developers are creating applications on Ethereum and there are more than 1,400 projects. While fabulous advancements like DeFi and Ethereum 2.0 are on the waiting list, many users and experts are already eager to see the results online. In other words, they want to know how these deployments will impact the future of Ethereum.
Some established companies such as Trustology have started preparing for the imminent launch of Ethereum 2.0 and are participating in Consensys' Codefi pilot project, which funds independent crypto news portal Decrypt.
This project has encouraged Ethereum developers to participate in staking transactions for their clients.
The Ethereum 2.0 rollout was unveiled live in 2020 and is one of the most significant events in the crypto world, just as important as the bitcoin halving events . The rollout of Ethereum 2.0 will take place in phases. Phase 0 is scheduled for the last months of summer or the first months of autumn. It will be a central upgrade for the entire Ethereum ecosystem, as it will be the transition from a Proof of Work (PoW) consensus mechanism to a Proof of Stake (PoS) model .
The update is expected to provide lower latency and higher speed, two key aspects for blockchain adoption.
ETH price predictions for 2021 and the next few years
Predictions about the possible future price movement of Ethereum development have to take into account both external and internal factors.
Also, the most critical aspects at the moment remain the long-awaited move from Ethereum to a PoS mechanism, the fabulous future projects of DApps, DAO and DeFi projects that will be developed on the decentralized network. Considering these fundamental factors, the Ethereum price prediction for 2023 and 2025 is favorable.
What the experts say
Experts agree with the projections that the ETH price will remain in an uptrend in the coming years. According to reports from leading industry sources such as CoinTelegraph, Ethereum should break new all-time records this year.
Some analysts predict that the second-largest cryptocurrency on the market could hit new levels of all-time highs next year. In general terms, the future of Ethereum looks with good expectations regarding its value and its predictions.
ETH price predictions for 2023
Ethereum and its relationship with the billion dollar DeFi sector has its path to the all-time high totally clear. The imminent update of Ethereum 2.0 is another factor that will play a key role in increasing the value of ether. Ultimately, Ethereum development will remain in a bull market, its value will continue to rise, and the price can be boosted to a great extent. We expect a strong market capitalization and consequently a solid increase in the value of the coin. Therefore, it is very likely that this upward trend will persist through 2021, even into 2023. This prediction is mainly based on the growing interest of institutional and retail investors, and is due to the weakening of the world economy
ETH price predictions for 2025
For the second most popular cryptocurrency on the market, the year 2025 is going to be another step towards the culmination of long-awaited milestones. Based on previous performance charts and current advances, the forecast for ETH indicates favorable long-term growth. If Ethereum maintains growth patterns, it is possible that its value will hit a possible low of $ 3,500 or a high of $ 9,000 in the next five years, according to analysis by crypto capitalist James Todaro. This price projection is calculated taking into account historical ETH prices.
For a currency that rose from $ 0.25 to reach a record high above $ 1,900 per ETH in just three years, the current moment offers a good opportunity to enter the crypto market, at a time when historical changes are coming with great potential.
As scarcity and demand continue to increase, investing and trading in ETH will become more profitable as well. But once scalability issues are resolved, by adopting proof-of-stake consensus mechanisms, scarcity may no longer be an issue.
Is Ethereum worth investing or trading?
As the cryptocurrency market continues to mature and enter the traditional financial sector, it will give rise to the new phenomenon of decentralized finance (DeFi). Of course, Ethereum development will increasingly catch the attention of institutional investors in the future.
Although its price remains volatile, ETH is becoming essential for the portfolios of institutional and retail investors and those of traders. While the crypto community awaits the necessary changes to the Ethereum blockchain, the increasing use of DeFi projects is already driving the value of ETH. So the future of Ethereum is certainly bright.