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10 Factors That Influence Ethereum Price Predictions

BitForex Editor
Sep 07, 2020

Are you a Cryptocurrency enthusiast or an active investor in Ethereum coins? Are you observing the digital currency revolution and is still trying to make up your mind on when to invest? Are you the type that wants to plan your investment to the last detail before parting with your money and you are now trying to predict the future of Ethereum, one of the most popular Cryptocurrency? Either way, this piece is going to help you process your thought and make informed decisions.

Ethereum price forecast is not something that is cast on stone. Like every other cryptocurrency, Ethereum is a very volatile coin, and a glimpse at the graphical representation of its performance in the past few years will show significant price fluctuations. Having known this, predicting the Ethereum price for any given period is difficult. However, Ethereum has shown to be generally more profitable that a lot of the other Cryptocurrencies in the market.

The current global pandemic dealt a heavy blow to the digital coin market, living many cryptocurrencies battered. However, the Ethereum price bounced back rapidly from its lows to hit over $200 in July. It significantly outperformed other well-known competing coins. Virtual currency trading pundits have predicted that by the end of 2020, Ethereum price will be pegged between $195 and $240. Then this is expected to hit an average of $246 in 2021. Long term predictions have put Ethereum price at $490 by the end of 2023.

However, as we said, all these are predictions and none of them is cast on stone. But, we can be able to hazard a guess on what the future might look like for Ethereum by observing a lot of market factors closely. This will help you make sense of the Ethereum price prediction, take a calculated risk at trading digital currency, and get a very good return on your investment. Below are some of the factors that help and deter the growth of Ethereum prices in the market.

Use cases

Ardent followers and investors in Ethereum's are basking on the fact that the Ethereum coin is having more use cases more than the other Cryptocurrencies.  It is believed that the morel real-world use cases Etherem experiences, the more the growth prospect. The Ethereum platform is providing developers all over the world with APIs to build and deploy dapps across a broad spectrum of markets, which includes e-commerce, payments, transportation and logistics, insurance, and cloud storage.

Strength of Competitors

Ethereum has been facing and will continue to face stiff competition from emerging smart-contract platforms. If the other platforms become more competitive, it will slow down the growth rate of Etherum prices in the market. Notable competitors include; Ethereum Classic (ETC), Stratis (STRAT), and Waves (WAVES).

Scalability

Ethereum has achieved wide acceptance and this has led to the growth of the platform with millions of investors trading globally. While this is good for Ethereum's popularity, it has giving birth to a new problem. Can the system handle the amount of traffic it is getting?  The traffic is reducing the rate of the transaction, resulting in a hike in processing fees. The developers of this platform need to scale the platform or else, competitors might explore this and cause the Ethereum price to decline.

Dapps

Developers have built and deployed various dapps on the Ethereum network. Some of the popular ones include the prediction market framework Augur, fintech platform OmiseGo and decentralized file storage platform Storj. The emergence of these dapps has helped the price of Ethereum because aside from adding credibility to Ethereum, you need to purchase ETH to deploy dapps. Going forward, as more dapps are deployed, there success or failure will be a determinant to the price of Ethereum.

Ease of Access

As the second most traded cryptocurrency globally, Ethereum is available and accessible on a broad spectrum of trading platforms. This increases the credibility of the coin and also makes it easy for investors to trade and monitor it. If the trend continues, it will be good for the Ethereum price.

Supply Power

Ethereum is never in short supply. There is over 18 million ETH in circulation per year, meaning that the rate of inflation for the Ethereum price reduces annually and it is tipped to attain stability or equilibrium soon.

Corporate Collaborations

The developers of Ethereum, Ethereum Alliance hopes to collaborate with more Fortune 500 companies, tech startups, academic institutions, and software vendors. At the moment, big organizations like JP Morgan, Santander, Microsoft, and Intel are already on board the Ethereum project. As the list continues to grow, the price of Etherum will keep growing.  

Regulatory Battles

Governments are still threatened by the emergence and wide penetration of digital coin and will do anything within their power to checkmate the impact it might have on fiat money. So, expect more regulations around the use and trading of digital currency.

System Upgrade

The developers of the Ethereum network have kept upgrading the system to accommodate more and better functionalities and user experience. This has seen Ethereum evolve from a proof-of-work to a proof-of-stake business model. As more system upgrades continue to happen and hitting the desired outcome, the price of Ethereum will continue to grow as investors are now able to handle more transaction volume with ease.

Security Issues

As hackers find ways to exploit the loopholes in the Ethereum smart contracts code, investors will begin to lose faith in the network, which will negatively impact the price of Ethereum.

In a nutshell, investing in Ethereum just like any other digital currency trading is a risky venture with a lot of variables affecting its volatility or stability. So, there's no guaranteed way of knowing what the price of Ethereum will be per time.  That's why we recommend that you judiciously keep up with the industry trends, observe the factors, and understand the technical analysis of digital currency trading. Do this, and you can get the best out of your investment in Ethereum.

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