The COVID-19 pandemic has put business and our lives in disarray. The year 2020 has been bad for everybody, no doubt, but not for cryptocurrencies. For the first time, Bitcoin (BTC) broke records by surging past $47,000, while as of now, Ethereum (ETH) is trading past 4.5x its market value.
Bitcoin made headlines this week when institutional investors with the likes of Elon Musk of Tesla, investing in the world of crypto. On Monday, Tesla announced it had purchased $1.5 billion worth of bitcoin. The electric car company also said it bought bitcoin because of its ‘flexibility’ to diversify and maximize return on cash. Furthermore, Tesla also said it would accept payments in bitcoin for its products. Following Tesla’s announcement, the price of Bitcoin surged to new all-time highs of close to $44,200.
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That said, Ethereum and its fan also have plenty to rejoice too. The second-largest cryptocurrency by market value also set new records on Friday, trading above $1,700 for the first time. But, whether it’s Bitcoin or Ethereum, one thing we know about cryptocurrencies is that they’re volatile and highly susceptible to price fluctuation. Who knows Ethereum will regress to $1,420, which was at the end of January?
So, what are the experts’ predictions about Ethereum’s price? Where will it go next in 2021? What will determine the future of Ethereum?
Stimulus Package
If you analyze the price fluctuations of Bitcoin, investors should also know that the second-largest cryptocurrency shares the same trends as that of its much bigger peer. While Bitcoin is hovering above $48,000, analysts agree that the new President Joe Biden’s inauguration in January had played a part in it. That is because his administration’s $1.9 trillion stimulus package can fuel up inflation in the economy, which is yet to pick up from recession. Catalysts like these are one of the main reasons for cryptos’ incredible rise, especially Bitcoin. And Ethereum isn’t immune to it. Earlier this week, another cryptocurrency was at a record high, DogeCoin. Touted as ‘meme coin,’ DogeCoin gained in value following a trading frenzy on Reddit and a shout-out by Tesla CEO Elon Musk on Twitter.
The Age Of Ethereum
After Bitcoin, it’s Ethereum that is making the headlines. The second-largest crypto by market value after Bitcoin has witnessed its price soaring to over 25% this week to record highs hovering above $1,700. Recently, the world’s largest financial derivatives exchange operator, CME Group, announced that it would introduce its first Ethereum-based futures contract on February 8 in the cryptocurrency market alongside its Bitcoin options and futures.
Meanwhile, Grayscale, a cryptocurrency fund manager, relaunched its Grayscale Ethereum Trust. The company shut down the fund to new investors in December last year, citing “administrative purposes.” The trust fund’s performance has been good, with inflows of about 100,000 ETH this week alone. It’s worth mentioning that Grayscale currently manages nearly $5 billion in Ethereum.
Wall Street isn’t lagging when it comes to expressing rosy news about Ethereum. JPMorgan estimates that initial volumes in Ethereum futures will remain low for a while but expects the situation will change quickly.
In a note last week, JPMorgan analysts head Nikolaos Panigirtzoglou said, “The listing of CME bitcoin futures coincided with all-time highs in bitcoin prices, and researchers at the San Francisco Fed suggested that, by providing a market where bearish positions could be more readily expressed, the listing of these futures contributed to the reversal of bitcoin price dynamics,”
“In a similar vein, it may be that this week’s listing of Ethereum futures contracts will be followed by negative price dynamics by enabling some holders of physical Ethereum to hedge their exposures,” Panigirtzoglou said.
Ethereum Price Forecast For 2021
Earlier this year, Bitcoin trader Josh Olszewicz estimated that short-to-medium-term Ethereum price would be around $780. Olszewicz’s prediction reverberates Simon Dedic, the co-founder of Blockfyre, who also sees Ethereum changing hands at $800 in the short term. In the long term, Dedic predicts ETH will eventually trade at $9,000.
The managing partner at Blacktown Capital and fellow crypto capitalist James Todaro hopes that there is a potential that the market capitalization of Ethereum will reach $1 trillion. Thanks to the growing decentralized finance industry or the Defi industry. According to his estimate, the price of Ethereum could soar to $9,000.
According to online forecasting service WalletInvestor.com, ETH prices will rise to $872 and $1,076 by the end of 2021 and 2022, respectively. Interestingly, the website predicts the cryptocurrency will surge to $1,650 by mid-December 2025. That’s not a wild prediction or looking too ahead in the future because, as of writing this report, Ethereum is already trading past $1,700.
DigitalCoinPrice.com, another Ethereum projections website, highlights that the coin’s price will rise considerably and trade at $1,493 in 2021. The website also predicts the coin’s price to be around $1,614 and $2,222 in December 2023 and December 2025, respectively. Meanwhile, Longforecast also expects ETH to reach approximately $1,694 by the end of 2021.
However, all of these are predictions, and nothing is set in stone. Besides, not everybody seems to share such bullish stances. Mike McGlone, a commodity strategist for Bloomberg Intelligence, for instance. In his report, he said Ethereum and Ripple outperforming Bitcoin in 2020 was “indicative of the enduring nature of fintech in a world increasingly dominated by zero or negative rates and quantitative easing.” According to his predictions, ETH price will trade in a range of $500-$700 in 2021.
Meanwhile, Messari CEO and analyst Ryan Selkis is optimistic about Ethereum price surges for this year. “Bitcoin may be primed for a big year due to its macro positioning, but it’s Ethereum that has taken flight as crypto’s most important platform… one that could power an entirely new financial system, and a more open, resilient internet,” Ryan said.
However, Ryan reminds everyone that Ethereum isn’t actual money, and the increase in demand doesn’t necessarily translate to newer price records. He still thinks Bitcoin will always remain the most valuable and preferred digital currency or cryptocurrency for investors indefinitely. The same can’t be said for Ethereum and its kin.
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