The crypto margin trading of the Ethereum coin fell below $1,800 (as of May 23rd) for the first time since March 31st, as a result of the 60% market collapsing from its original all-time high position of $4,362 on May 12th.
Speaking of Ethereum price prediction, the position of the coin in the market is said to change massively due to the upcoming upgrade which is expected to change the ways of the transaction, that is, from verified and fees. Whereas, others expect the Ethereum price prediction to rebound and advance to fresh highs.
Having said that, the question that remains unanswered is - How realistic are these expectations for the price of Ethereum? Is this a good time to invest in Ethereum (ETH) given the market position? Would the Ethereum blockchain substantially improve its portfolio position for substantial gains?
If you are not finding answers to such questions, then we are here to help! Given the crypto margin trading price fluctuations, here are the predictions of the Ethereum coin price for 2021 and beyond.
Let's take a look at the Ethereum price prediction analysis with the recent volatility in the cryptocurrency:
Ethereum Price Predictions - The Coin Takes the Lead in DeFi and NFTs
ETH is the second-largest cryptocurrency coin in the crypto market after Bitcoin (BTC), with a market capitalization of around $306 bn on May 25th (though still less than half of bitcoin’s $727bn). This market cap of ETH reflects its dominance, and there are currently about 116 million ETH coins in circulation as compared with 18.7 million Bitcoins.
Vitalik Buterin, a computer programmer, proposed that the Ethereum network in 2013 should develop a blockchain technology attaching real-world assets. He along with multiple other co-founders crowdfunded the development in 2014 and launched the network in 2015.
At the beginning of December 2020, the Ethereum 2.0 upgrade got underway to increase the scalability and security of ETH. The upgrade is set to significantly shift the network away from Bitcoin’s proof-of-work (PoW) consensus algorithm to verify the blocks and mining coins— towards the proof-of-stake (PoS) algorithm. It involves the so-called “ETH1” PoW chain, tools, and applications plus “ETH2” software and protocol layers.
As of 2021, with the Ethereum price upgrade, shift to PoS, and the Berlin hard fork; the blockchain split on April 15th, 2021, was activated on block 12.244.000. This resulted in a sharp transaction fee rise since it included a smart contract to address transactional efficiencies.
Simon Peters, a crypto asset analyst at eToro stated that due to the network upgrade, Ethereumis now proving its use case. And, with the developers piling onto the platform there is also gain in traction with investors.
The Ethereum's Ecosystem: DeFI
The Ethereum ecosystem has emerged as the first choice for developers launching decentralized finance or DeFi applications and non-fungible token (NFT) sales, although some new applications are turning to alternative blockchains.
The network of Ethereum is the key to the advent of DeFi. It runs on smart contracts of the EVM that enables the holders of various cryptocurrencies to use collateral coins for financial services. These services include loans, insurance, trading, as well as savings, and the ability to attach real-world assets that enable developers to launch NFTs on Ethereum.
The application of DeFi emerged in 2020 and opened the space with new capabilities for the burgeoning fintech. However, NFTs came to the fore in early 2021, with high-profile multi-million-dollar sales, attracting investors in the cryptocurrency market.
What About Ethereum’s High Gas Fees?
As part of the 2021 Ethereum upgrade, the Ethereum Improvement Proposal (EIP) 1559 is scheduled for July 14th and will change the way Ethereum charges transaction fees, known as the ‘gas price.’ This means it will switch from the current auction mechanism of high gas prices to base fee amount adjusting up and down by the protocol based on how congested the network.
For instance, when the ETH network exceeds the target per-block gas usage, then the base fee experiences a slight rise. On the other hand, when the capacity is below the target, it slightly decreases. The reason being the constrained change in the base fee and the predictability of the maximum difference from block to block that allows wallets to auto-set the gas fees for users in a highly reliable fashion.
Adding on with the addition to the base fee, there is a priority fee set by the sender that helps reward the miners. That means the base fee would be burned, making Ethereum a deflationary asset to drive up its value. This counterbalances the Ethereum inflation while giving the block reward and priority fee to miners. However, as per the proposal, it was important to ensure that the miners of the block do not get the base free as it not only removes the incentives but also manipulates to extract more fees from the users.
As per reports, Ethereum gas prices have climbed to around 298.78 gwei*on May 19th, then slid to 143.67 gwei on May 24th, and lower to 68.5 gwei on May 25th. As for May 2020, this figure stood at 35 gwei with a spike in June 2020 to 709 gwei. This prompted the developers to launch alternatives to Ethereum with a lower fee that can run the DeFi applications and NFTs, making the EIP-1559 upgrade significant.
*gwei - is a billionth of an ether
The Bouncing of the Ethereum Price Prediction to Find Support After Selloff
The price launch of ETH at 2.14 against the US dollar in 2015 happened to spike to $1,283.42 amidst the cryptocurrency rally of January 2018. From here, the Ethereum network price fell back to $86.17 in December 2018 with remaining below the $300 level, until the reviving market rally in 2020.
Trading Ethereum to US Dollar - ETH/USD CFD
As of last year, the ETH coin climbed from $125.63 to $729.65 reflecting a 480.8% increase with ETH price reaching $2,000 in February’s cryptocurrency rally and then rising back to that level in April. Nevertheless, on May 12th, 2021, ETH soared to a record high of $4,380, which is a gain of 500% as of the start of the year.
After a social media post from Tesla (TSLA) CEO Elon Musk, the Ethereum price plummeted to $1,952 on May 19th, and reports of a cryptocurrency ban in China rattled the markets. This resulted in a tick up to $2,993 on May 20th which unfortunately dropped further to $1,737 on May 23rd. Nevertheless, it was again in the position of the coin trading up to $2,672 with the market finding a bottom, with the latest reading of May 25th where the ETH price stood at $2,668.
The Verdict: Ethereum Price Prediction - Would Crypto Rebound to New Highs?
According to CoinCodex's technical analysis indicators for the Ethereum price prediction, it was a bit bullish with 25 signals or indicators as compared to the 8 bearish signals. At $2,600, the ETH coin traded above for three-and five days with simple and exponential moving averages, while remaining below the 10-50 day averages moving. There is also short-term support around $2,268 with resistance at $2,828 and above.
Ethereum price prediction by Digitalcoin remains bullish with averaging $3,722 in 2021 and rising to $4,650 in 2022. Over the long term, as predicted, its forecast of the price would climb to an average of $8,047 in 2025 and $11,671 in 2028.
Algorithm-based forecasting service Wallet Investor revised down the Ether forecast from the $3,200 level for the start of June to $2,070.95, which means, rising to $2,949.99 at the end of the year.