Where Ethereum Goes from Here
Aside from Bitcoin, no cryptocurrency is more popular and promising than Ether (the native token of the Ethereum platform). ETH prices exploded by 9,383% in 2017, beating every Ethereum price forecast in the world. Yet, now that it’s time to make Ethereum price predictions for 2018, analysts outside crypto-land remain gun-shy…
…and it’s no secret why. They are worried about a bubble in the crypto market cap.
Out of this concern comes a hesitancy that prevents them from stating the obvious: Ethereum prices could continue to rise.
Analysts had the same concern about Bitcoin last summer, and look at where BTC prices are today: up by more than 317% in the last six months.
Likewise, the Ethereum-to-USD exchange rate will probably keep setting record highs in 2018, regardless of what mainstream analysts say.
If you’re confused as to how Ivy League-educated analysts can be so wrong, so many times, it’s because they are incentivized towards “cautious predictions.”
Here’s the logic:
Let’s say an analyst warns you away from an investment but you ignore their advice. If they’re wrong, you make a lot of money. At that point, why would you care about their prediction? You made money, after all. But if they’re right, and you lose money, you’ll think they are extremely wise. Either way, a cautious prediction keeps them safe.
But a bold prediction—say, that Bitcoin would reach $10,000 when it was trading in the hundreds of dollars—paints a target on an analysts’ back. What if they are wrong? Not only will people lose money, they’ll have someone to point their fingers at.
That fear doesn’t apply to me. I did predict that Bitcoin would reach $10,000. And I did it when BTC was trading below $2,000, meaning that my readers had a chance to make tremendous returns.
Now I’m pinning a $2,500 price tag on the Ethereum price forecast for 2018.
5 Tailwinds for ETH Prices
It’s not like my Ethereum price prediction was conjured from thin air. There is a healthy mix of micro and macro factors propelling ETH prices to $2,500.
Some of these factors include:
- The rise of initial coin offerings (ICOs) on Ethereum.
- Development of further use-cases.
- Development of interoperability.
- Increasing transaction volumes.
- Regulatory acceptance of blockchains.
It would be easy to ignore one of these reasons, but only someone glued to a bearish position on cryptocurrencies would dismiss them all. The tailwinds are too obvious.
Things get even more definitive when you dig into the performance of various asset classes. Not counting Bitcoin, digital assets outperformed gold, U.S. equities, global equities, and global real estate. Investors could have made up to 40 times their initial investment.
|Returns —Trailing 12 Months (TTM)|
|Global Real Estate||12.6%|
(Sources: Yahoo! Finance, CoinCap, CoinDance)
That being said, there are some pockets of the crypto-world that require deflating. Some of the ICOs, for instance, are taking place with zero oversight or accountability.
It’s only a matter of time until regulators decide to clamp down on these assets. In fact, it’s already starting to happen.
The Chinese government banned cryptocurrency trading, Canadian authorities dragged ICOs under the jurisdiction of securities law, the U.S. Securities and Exchange Commission (SEC) warned that new rules for ICOs are imminent, and South Korea banned anonymous trading.
This means the ICO market cannot charge full steam ahead or it’ll get tangled in a mass of red tape. And, since ICOs were driving ETH prices higher, this weakened the currency’s outlook in the third and fourth quarters of 2017.
I’m not oblivious to these flaws. My Ethereum price forecast acknowledges some downside risk, but it’s important to remember that these flaws, while serious enough to warrant attention, are not fatal. There is still tremendous upside left untapped for Ethereum prices.
Ethereum vs. Bitcoin
I am often asked about the relationship between Ethereum vs. Bitcoin. Most of the questions boil down to the same thing: “Is it zero-sum?”
Investors want to know if Bitcoin’s success means failure for Ethereum, or vice versa. The short answer is “No.” There’s enough room for both ETH and BTC to thrive.
This is partly because cryptocurrencies come in different shapes and sizes. On one hand, you have Bitcoin, which is a store of value that hopes to become a daily-use currency. On the other, you have Ethereum, a blockchain platform built to run applications.
It just happens to have a token as well.
Saying that one will devour the other is like saying the U.S. dollar and British pound cannot co-exist. Of course they can (and do). The only difference is that Bitcoin and Ethereum are not separated by national boundaries, but by purpose.
This much is obvious, based on what happened last year. Here’s the Ethereum price history chart for the last 12 months.
Now take a look at the Bitcoin price chart for the same period.
Notice the similarities? Sure, ETH prices were far more impressive on a percentage scale, but it was starting from a lower base. The material point is that both currencies thrived in the same environment. They weren’t alone, either.
The entire crypto market cap blossomed in 2017, shooting up from $17.7 billion to over $565.1 billion. That’s a 3,085% increase in 12 months.
Headwinds for Ethereum Price Prediction 2018
However, Ethereum isn’t perfect. Like Bitcoin and other cryptocurrencies, it faces scaling issues that won’t be resolved overnight. These issues are thrown into sharp relief almost every time there is an ICO.
The blockchain clogs up, transaction fees start to climb, and it becomes clear how much further we have to go. Having more people interested in Ethereum mining would be a start.
This is truly saying something, considering that Ethereum is already using a “small country’s worth of electricity” for its mining processes. However, with more transactions crossing Ethereum’s blockchain than Bitcoin’s, something needs to be done. (Source: “Ethereum Is Already Using a Small Country’s Worth of Electricity,” Motherboard, June 26, 2017.)
Add this to the fact that transaction fees shot up 918% in one quarter, and it’s clear that we should be a little worried. But try not to worry too much, because this is the bleeding edge of technology. And it always looks like chaos at the bleeding edge.
My Ethereum price prediction for 2018 starts at $1,500. ETH should cross that level sometime before the summer, barring any exceptional circumstances. After that I expect it to accelerate to $2,500. Given the current level, this forecast presents an upside of approximately 136%.
However, you can supplement those gains by adding more ETH when the price dips, as it surely will from time to time. These assets are extremely volatile.
My Ethereum price forecast for 2018 accounts for this volatility in part by looking to financial history.
In the late 1990s, there was a surge of dotcom investments. This bubble famously collapsed in the early 2000s, but a few titans emerged from the ashes of that disaster. Google (Alphabet Inc NASDAQ: GOOG), Amazon.com, Inc. (NASDAQ: AMZN), Paypal Holdings Inc (NASDAQ: PYPL); these companies run the world today.
In much the same way, Ethereum and a handful of other cryptos will emerge from this cryptocurrency phenomenon.