Ethereum Price Prediction: Are you Bullish or Bearish?

Ethereum Price Prediction: Are You Bullish or Bearish?

Author: 
Michael R.
Date: 
November 17, 2018
Read time: 
7 minutes
Ethereum
ICO
DApps

In this article, we will introduce you to the different factors that should be considered when making your own Ethereum price prediction. Ethereum was the first cryptocurrency project that enabled developers to create and deploy decentralized applications on top of blockchain technology. Since its inception in 2015, the price of Ether has been extremely volatile ranging from prices as low as $0.50 to over $1,000 per coin!

In this article, we will introduce you to the different factors that should be considered when making your own Ethereum price prediction. Ethereum was the first cryptocurrency project that enabled developers to create and deploy decentralized applications on top of blockchain technology. Since its inception in 2015, the price of Ether has been extremely volatile ranging from prices as low as $0.50 to over $1,000 per coin!

This volatility has polarized the community causing some to feel very bearish and others to feel very bullish about its future. Ultimately, after we introduce a few different factors to consider, it will help you put an end to the bullish vs bearish Ethereum debate and create your own informed Ethereum price prediction.
 

Consider Ethereum’s History

Three main factors to consider when making your Ethereum price prediction and any price prediction for that matter are the project’s history, historical price action, and the time frame of your investment. We will begin with Ethereum’s history regarding project milestones and controversial moves made by the team. We will also assume that you are speculating on Ethereum as a relatively longer term hold, formulating a 2020 Ethereum price prediction or later.

Ethereum Hard Fork

Back in June of 2016, Ethereum implemented a hard fork. This event shook the entire industry and is arguably the single most controversial event to happen in all of crypto. Since Ethereum enables developers to create and deploy applications on a decentralized network, creators and developers were eager to get started and build the next big dApp. One app of many was called the DAO, which stands for decentralized autonomous organization.

The DAO is basically an automated venture capital firm, where different projects are proposed to the organization (the organization being you, me, or anyone who holds DAO tokens). The organization can then vote on and contribute to different projects. It is not important to understand exactly how a DAO works right now, but what is important to remember is that a hacker exploited a major vulnerability in the smart contract which ran the DAO. Smart contracts are the magic which allows a developers’ application to communicate with the main Ethereum blockchain.

In May of 2016, the DAO raised $100M worth of Ether in an ICO; at the time, this was by far the largest ICO. Without getting into much detail about the actual exploit, a hacker managed to drain 3.6M Ether from the DAO. 3,600,000 Ether is enough to effectively hurt the price of Ethereum and create massive distrust in the project as a whole. Within a matter of days, Vitalik (the creator of Ethereum), exchange owners, and other figureheads agreed a change is needed, and thus, an Ethereum hard fork was implemented.
 

The Result of the Ethereum Hard Fork: ETH and ETC

As a result of this Ethereum hard fork, there are now two coins: ETH (the Ethereum we all know) and ETC (which stands for Ethereum Classic - the original Ethereum). Naturally, ETH’s backing is much stronger than ETC’s. The reason this fork is critical to consider in your Ethereum price prediction is that it defined the community into what it is today; it is clear that the community still believes in Vitalik, and all of the team’s efforts are put towards ETH, not ETC.

Next, let’s briefly look at some of Ethereum’s price history, to really put its current price into context.
 

Ethereum’s Market History

As mentioned, Ethereum has an extremely volatile price. Going every 6 months from inception to now, the market prices looked like the following:

At the time of this writing, the price is ~$200.00 and still seems to be in a very bearish decline. As you can see, from February 2018 to August 2018, the price has dropped ~70%! For most investors, this is extremely difficult to stomach and unreasonable - giving weight to the bearish side of the argument. There does not seem to be any bull trend in sight. Still, this is short-term price action; longer-term statistics would show that the overall lifetime trend is bullish and now may be a good time for long-term investors to buy in.
 

Bullish vs Bearish - Which are you?

At this point, you now have two important pieces of information in your mind for formulating your own Ethereum price prediction.

  1. Ethereum hard fork. You are aware that there is another coin called Ethereum Classic (ETC), which is the original Ethereum codebase. After fixing vulnerabilities, it split into a new chain. Do not confuse ETC with ETH. ETH is the coin we are referring to.
     
  2. Price action. You have a broad understanding of ETH’s historical price action which should help you understand why people feel so strongly about its current price.

Let’s explore more factors that contribute to both the sides of the bullish vs bearish debate.

Understanding a project’s fundamentals such as its mission, controversies, upsides, and downsides are critical for making any investment decision.

Bullish Reasons

Despite the bear trend over the past few months, there are many positive fundamental reasons driving Ethereum’s growth. Let’s explore the primary reasons for the bullish mindest in the bullish vs bearish debate:

  • Government acceptance. In most of the world, specifically the US and EU, governments have not declared cryptocurrency usage illegal. Instead, they choose to work with it by taxing it and attempting to categorize different coins and tokens as commodities, securities, or other types of assets.
     
  • Business acceptance. There are venture-backed companies dedicated to developing cryptocurrency applications. One example is Consensys, a company led by Joseph Lubin who is an Ethereum co-founder. The firm has over 900 employees working to bring Ethereum acceptance mainstream.
     
  • Practical usage. Unlike many other blockchains that allow developers to launch applications, Ethereum is arguably the only project seeing real usage. Billions of dollars have been raised through initial coin offerings (ICOs) on the Ethereum platform.

Source: ethereum.org
 
  • Competent Team. One of Ethereum’s biggest issues is scalability. Fortunately, the Ethereum team has enough trust from the community that despite technical road bumps, the community is willing to see if they can fix the issue. The team is rolling out Proof of Stake (PoS) in the near future, which should help the network scale properly.

It is for the above reasons that people believe in Ethereum. Developers are actually deploying applications and the community is extremely loyal. So, while we are in a bear market, many believe that Ethereum’s much-anticipated Proof of Stake implementations and overall maturity is a signal for a bull trend to come. Let’s explore the other side of the coin (no pun intended) to help you make a fair judgment for your own Ethereum price prediction.
 

Bearish Reasons

As much as we prefer to look at the bright side of a situation, it is only fair to note the downsides. To be as objective as possible in your Ethereum price prediction, or really any prediction, it’s important to know both sides of the story. Let’s note the downsides with another list.

  • Failed ICOs. ICOs occur when companies fundraise money for the development of their own projects. A large majority of ICOs have been based on Ethereum. This means that projects raised billions of dollars worth of ETH. The danger here is that many projects either failed, were scammed, or intend to launch their own mainnet only to compete with Ethereum. Long story short, this means that there are billions of dollars worth of ETH that are at risk of being sold on the market, causing Ethereum’s price to plummet even further.
     
  • Lots of competition. Decentralized applications (DApps) are the next big thing. With popularity and potential comes competition. Ethereum has several competitors now that are gaining momentum. Some of these projects are developer-friendly or have claimed to learn from Ethereum’s mistakes.
     
  • Ethereum hard fork. The hard fork from ETC to ETH still has some people worried about the Ethereum team’s competency. There is still a community of ETC supporters, and others don’t believe in either ETC or ETH.

 

  • Skepticism of fixes. Going along with the Ethereum hard fork scenario, in addition to scalability issues, many people are reluctant to believe in Vitalik and his team. As a result, they may be investing in competitors, fueling the progress of rival projects.
     
  • Price action. Going from $1 to $1,000+, back to the $120 has the average investor worried. There are many investors sitting on the sidelines waiting to see if the Ethereum team can technically fix their issues as well as watching the price to see where the real bottom is.

 

So, What is your Ethereum Price Prediction?

Unless you are someone who trades frequently, your Ethereum price prediction should not be a single fixed number. Instead, your Ethereum price prediction should simply tell you if you are bearish or bullish in the long run. Through understanding the purpose of Ethereum and some of its controversial history (e.g. the Ethereum hard fork), you should begin to gain a sense of whether you see a bullish trend or a bearish trend in the future.

When it comes to our Ethereum price prediction, we are optimistic. After being involved in the industry for a long time, we have learned that most new technology has its setbacks, criticisms, and downsides, but it is only those who believe in the technology that reaps the benefits in the end. Still, it is up to you to make your own decision. Understanding a project’s fundamentals such as its mission, controversies, upsides, and downsides are critical for making any investment decision. It is worth emphasizing fundamentals, as this piece is not a technical analysis.

Don’t rely on any single source of information. Learn about other projects in the space and develop your own well-formulated opinions. Check out our blog for balanced and varied discussions on all sorts of crypto topics!

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