The price of Ether would have to multiply eight times to exceed USD 10,000, according to analysts. Other cryptocurrencies and tokens could follow Ether, leading to what everyone knows as altseason.
The Fundstrat Global Advisors Company recently stated that “Ethereum represents the best risk-reward ratio in cryptocurrencies.” This group of financial researchers believes that the price of Ether (ETH) could reach USD 10,500 this year.
The expectation that the development of new “real-world applications” will continue serves as the foundation for this Fundstrat forecast. Those innovations include smart contracts, stablecoins that maintain parity with the US dollar, and decentralized finance (DeFi) protocols, among others.
Even though many people criticize the fees on Ethereum for their magnitude, the analytics company also regards them as a bullish indicator. Fundstrat made a comparison under which the high consumption of gas/fees is equivalent to the increasing number of institutional investors in Bitcoin. Both factors would be catalysts for the increase in the price of these cryptocurrencies.
The company estimates that the fees that users pay on Ethereum this year will reach USD 4 billion. This figure is almost seven times higher than the USD 600 million that users paid last year. Based on statistical calculations, the analysts argue that an ETH price close to USD 10,500 would be in line with this growth.
Other Possible Growth Factors for Ethereum
In addition to these factors, it is necessary to add the potential institutional investments that could reach Ethereum in 2021. A recent report from the analytical platform CoinMetrics takes this possibility into account.
There could be acceleration in institutional investment in Bitcoin, as early signs for 2021 point. “On January 4th, Three Arrows Capital revealed a USD 1 billion position in GBTC. SkyBridge Capital also announced a USD 300 million Bitcoin position and the launch of a Bitcoin fund for accredited investors.”
Other relevant factors are the possible proposals for improvement and the development of version 2.0 of Ethereum, which is already partially working. Some investors believe that the native token of the blockchain, which Vitalik developed, can soon generate a considerable monetary return.
Ether would have to multiply its current price (of around USD 1,314) eight times during 2021 to reach USD 10,500. The Ethereum cryptocurrency went from USD 168 to USD 1,432 in the last 12 months. That last Ether price was above its previous all-time high of USD 1,420. Therefore, it is not exorbitant as its growth during that period was 8.42 times.
The higher valuation of Ether could also lead to an increase in the price of other cryptocurrencies and tokens developed on the Ethereum blockchain. If this happened massively, it would be an indication that the so-called altcoin season (or altseason) has begun.
One of the factors that have driven the price of Ether higher is the boom in investors in Bitcoin in the last year. The pioneering cryptocurrency is the one that sets the tone for the behavior of altcoins on the market. The trust of users in the cryptocurrency that Satoshi Nakamoto created has also favored the second-largest cryptocurrency on the market.
By Alexander Salazar
