Ethereum Price Forecast: Animal Spirits Make ETH Technicals Hard to Read

ethereumEthereum News Update

As cryptocurrency markets continue to trade sideways, investors are growing impatient. What happened to three- and four-digit returns? Where are the epic rallies?

Sorry to disappoint, but it’s not that simple.

No one can pinpoint when cryptos will surge (don’t trust anyone who says they can predict with 100% accuracy). Animal spirits still play a huge role in price dynamics, meaning that what people feel about cryptos actually matters.

So, unless an analyst can read minds, it’s impossible to accurately forecast when investors are ready to return to bullishness.

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I know what some of you are thinking. What about technical analysis, Gaurav? TA doesn’t need to measure “investor sentiment,” because it reveals those intentions through patterns.

Sorry, but as I said before, it’s not that simple.

A skilled technical analyst might beat the market. I wouldn’t try to contest that fact, but you have to understand that charts aren’t omniscient. They don’t contain all relevant information.

Ethereum Price Chart

eth price chart for 26 feb

Take the example of a “golden cross” pattern. Imagine if that showed up on an ETH price chart one day, but regulators banned cryptocurrency trading without warning the next day. Obviously, Ethereum prices would be crushed, golden crosses be damned.

These negative externalities—or “unknown unknowns,” as Nassim Taleb would have it—are impossible to forecast. All you can do is buy cheap and trust the fundamentals.

Consider again the example of Ethereum prices.

They are currently 41% below their all-time highs. This would suggest that ETH has significant upside, always assuming that its fundamentals are strong. Are they?

I’d say yes, given the following:

  1. Regulators don’t mind Ethereum. Central bankers aren’t fond of Bitcoin, which aims to disrupt their power base by offering consumers something other than fiat currency. They see Ethereum as a more palatable alternative because its core function is to facilitate the creation of decentralized applications.
  2. Wall Street believes in Ethereum. A research report from JPMorgan Chase & Co. (NYSE:JPM) is favorable to Ethereum. It said: “The ability for users to deploy personalized smart contracts and decentralized applications makes this one of the more likely to be used Blockchain platforms across applications.” That’s quite an endorsement.
  3. Ethereum has solid leadership. Over the last four years, Vitalik Buterin has proved himself a wise and competent leader. He keeps the broader Ethereum community focused on issues that matter. And, on rare occasion, he pushes back against unfair criticisms of the platform. This kind of stewardship is rare in the blockchain community, thus giving Ethereum another step up on its competitors.

All in all, there’s a ton to be excited about. We’ll go into Ethereum’s fundamentals in more detail tomorrow, but for now, investors should consider ignoring the technicals. They won’t tell you what you can’t expect.

Analyst Take

What is my point? Simply that good investing requires patience, faith in fundamentals, and a strong stomach. There are no shortcuts.

On a positive note, the industry’s rapid pace of change increases the odds of a positive externality surfacing before July. If that happens, our Q2 Ethereum price forecast of $1,500 could easily come to fruition.