Ethereum has been a major player in the cryptocurrency space since its launch in 2015, and the second-largest token by market capitalization has been making major headlines ever since. Today, it soared past the milestone of $2,000 for the second time in 2021, reaching a new all-time high of $2,040.18. This latest rally comes as the crypto market continues to climb, with Bitcoin passing $56,600 around the same time. With Ethereum hitting a new record, investors are wondering — Can Ethereum finally break through past this milestone? To answer this question, we take a closer look at the Ethereum landscape and analyze what the future may hold.
1. Ethereum Surges to $2K as Bullish Speculation Grows
Cryptocurrency
Ethereum surged to a new all-time high, briefly touching the $2,000 mark as bullish speculation among traders continues to increase. Ethereum is now up over 800% since the beginning of 2021, making it one of the best-performing assets in global financial markets.
Ethereum’s incredible success has been driven by its increasing recognition among institutional investors. Large-scale enterprises like JPMorgan Chase & Co. have recently started to put significant funds into the blockchain-based asset while Coinbase and other exchanges have welcomed Ethereum to their trading platforms.
The enormous bullish speculation around Ethereum is currently being seen as a sign of decentralization becoming increasingly more accepted in the cryptocurrency market – as opposed to Bitcoin’s principal of centralization and central control. Ethereum enables its users to build their own smart contracts for tokenization, creating a flurry of options for commerce, DeFi and lending solutions.
Lastly, the rise of Ethereum prices has been mirrored in other cryptocurrencies, such as altcoins, crypto derivatives and Mining, making it difficult to tell when the Ethereum surge will bring on another retracement. This has many investors re-evaluating their portfolio risk management strategies in order to make the most out of the newly-emerged Ethereum bull market.
2. What Caused the Price to Reach Record Highs?
Historical Run-up
The recent run-up in the price of various commodities to all-time highs has been a long time coming. Analysts attribute the increase to a confluence of both long-term and short-term factors.
- Long-term drivers may include low interest rates and demand for hard assets, due to widespread economic uncertainty.
- While short-term drivers are linked to supply-side issues, such as reduced production due to pandemic-related shutdowns.
Low Interest Rates Impact
Among the long-term drivers, low interest rates have been a major contributor. When interest rates fall, the cost of borrowing money becomes cheaper, making it more attractive to invest in commodities. This increased investment creates additional demand, and when demand outpaces supply, prices increase.
COVID-19 Impact
The situation was exacerbated by the impact of the Coronavirus pandemic on commodities. While increased demand was driving up prices, supply was impacted by production shutdowns. This limited the ability for producers to meet the growing demand, which further drove up prices.
Other Factors
In addition, sentiment may also be playing a role, as investors looking to hedge against further economic turmoil turn to commodities as a safe investment option. Currency devaluation can also contribute to a higher price as demand increases for more volatile currencies. The amount of foreign investment in commodities is a key indicator of whether investors are using it as a safe haven from other investments.
3. Will Ethereum Finally Break Through the Mark and Stay?
Ethereum has been making a bid to break past the 200 USD mark, and the cryptocurrency looks poised to do it.
Analysts predict that Ethereum will stay above the 200 USD mark for more than a fleeting moment. Ethereum will be able to reach a much higher value, and prices could reach all-time highs in the near future.
The rise of Ethereum is tied to its use cases, and there are dozens of potential applications for the cryptocurrency. The vast majority of these applications are still in the early stages and many are backed by big-name companies.
One such project is the Ethereum-based DAO, which is expected to decentralize the traditional venture capital model. Ethereum is also being used for the internet of things, digital asset storage, and smart contracts. With so many potential applications, Ethereum could easily become the leading crypto asset and become an integral part of the global economy.
These factors, combined with the bullish sentiment of Ethereum bulls, will likely cause Ethereum to break through the 200 USD barrier and sustain its value for the long term. Investing in Ethereum at this stage could be a lucrative venture and could open up new opportunities for the cryptocurrency.
4. Analyst Predictions on Ethereum’s Future Price Performance
2020 Predictions
- CoinDesk analysts predicted that the Ethereum market cap would exceed $1 trillion sometime in 2020.
- A Bloomberg Quint report released in October 2019 cited a “positive outlook” for Ethereum, predicting an increase of “about 40 percent” over the next 12 months.
Meanwhile, market research firm Ambcrypto estimated that Ethereum’s price could reach $1,600 in 2020. They noted that Ethereum is now “well-positioned” to benefit from technological advances such as scalability improvements and the introduction of new tokens.
Crypto Research Report also forecast a bullish trend for Ethereum in 2020, predicting that the asset could reach as high as $2,500 in the coming year.
- Christopher Wood, Global Head of Equity Strategy at Jefferies, has predicted that Ethereum could reach $4,000 “later this year.”
Right now, however, many analysts are adopting a more cautious approach. While Ethereum has seen some positive price movements in recent months, the market is prone to wild fluctuations. As a result, many investors remain wary about making too bold a prediction.
The Ethereum community has been eagerly awaiting the price of ETH reaching $2K for the second time. With the surge in retail buying and institutional investors showing more interest in the cryptocurrency, many are watching to see if ETH will break through the $2K barrier and stay above it. For now, things are looking positive and cryptomarkets seem to be filled with unbridled optimism. Only time will tell if ETH succeeds in its quest to reach beyond $2K.