ETH’s all-time high (ATH) is $1400. It happened on the cryptocurrency hype in January 2018, when Bitcoin was worth $20K. Now no one doubts that BTC will overcome its ATH. But there is no such confidence about ETH.
ETH’s all-time high was in mid-January 2018, then after 3 months, ETH dropped 4 times. And in December of that year, it was about $80. In February of this year, ETH hit over $280, but the coronavirus dropped it to $110. Now ETH is growing again. There is a simple explanation for this extreme volatility.
In 2018, almost all ICOs were held on the Ethereum blockchain. Most of the projects turned out to be a scam, this led to a situation when ETH dropped more than the market dropped. Now the situation very much looks like it was in 2018, but there are DeFis instead of ICOs. These projects promise a return of thousands of percent. The term “yield farming” has appeared, which means “growing money” by transferring it from one project to another, more profitable. DeFi projects are also launched on the Ethereum blockchain, so the ETH price has already increased by 200% since the beginning of the year. Commissions are growing on the network; miners are earning huge amounts of money. According to calculations, if the DeFi sector grows 8-10 times, then the price of ETH will increase 4-5 times. Judging by the charts, in an uptrend, this will happen on the horizon of two years.
However, this technical analysis does not take into account the upcoming update of the Ethereum network – Ethereum 2.0 with the transition to the Proof-of-Stake consensus. In addition, other blockchains are also struggling to attract developers to launch De-Fis. These are, for example, Tron and Binance Chain. So technical calculations may not be justified. But there is a conclusion from the category of fundamental analysis: ETH always follows BTC. There is little doubt that Bitcoin will grow because very much has been said about it in connection with the excess of fiat money and problems with investing in gold.
The quantitative easing programs in the US and the euro area have thrown a huge amount of unsecured money into the financial markets. There is no clear mechanism for withdrawing excess money supply. Therefore, in order to preserve wealth, investors are increasingly investing in cryptocurrencies, most often in BTC.
But bitcoin is an old and slow cryptocurrency. As investors overcome their fear of the crypto market, they will start investing in other cryptocurrencies as well. First of all, in ETH, since after the launch of Ethereum 2.0, the network promises to be cheaper, safer, and more stable. If the update happens according to plan, then ETH may repeat its historical record in a year.