- May 20, 2021
- Posted by: Trading
- Category: News
Ethereum is one of the biggest crypto gainers of 2021 so far. The months of April and May saw it gain strongly in value, rising by more than 20% in a single week and continuing to advance beyond the record high round number reached at $4,000. Interestingly, this advance has come at a time when Bitcoin, the largest cryptocurrency, has been trading mostly sideways. In this article, I take a closer look at Ethereum as it has become more worthy of attention due to these developments and asking where the Ethereum price is likely to go over the rest of this calendar year.
Ethereum Technical Analysis
A look at Ethereum in the short-term and long-term charts shows strong bullish sentiment. From a look at the daily chart, which is an indicator of short-term momentum, the moving averages point to bulls in charge of the market. The 50-day, 100-day, and 200-day moving averages are all trending upwards. The shorter-term (50 and 10-day) moving averages are also firmly trending above the 200-day moving average. This is a key indicator that the current price is trending much faster than the historical average.
Other key indicators point to a similar scenario too. One key indicator for resistance and support levels is the Bollinger band. Ethereum has been trading close to the area of the upper Bollinger band in the daily chart, with the band gapping up. This indicates that while the price is trending upwards, a breakout is yet to come. There is still lots of room for an upward breakout in the price of Ethereum.
Ethereum Daily Price Chart
The potential for a breakout is further reinforced in the longer-term weekly chart. One of the key indicators of a potential breakout is when a short-term moving average cuts a long-term one from below. This is typically an indication that the current price is gaining exponentially faster than the historical price average after a period of stagnation. In the weekly chart, Ethereum’s 100-week moving average recently cut the 200-week moving average from below. At the same time, the 50-week moving average is gapping up fast, indicating that bulls are gaining momentum. This indicates that Ethereum is in the process of an upside breakout that could see it make new highs now that it has breached the key round number price level at $4,000.
Ethereum Weekly Price Chart
The fundamentals, too, support the possibility of an Ethereum breakout. Some of the key fundamentals that make Ethereum strongly bullish going forward are:
Upcoming Ethereum Upgrade
Ethereum is in the process of an upgrade to Ethereum 2.0. The shift is from a Proof-of-Work algorithm to Proof-of-Stake. The upgrade started in December of 2020 and has since seen over 4 million Ethereum staked. This upgrade is important for a couple of reasons.
Firstly, it will remove most of the scalability bottlenecks facing Ethereum. Due to an explosion of Dapps and a huge price rally, Ethereum transactions have become almost impossible to work with. Gas prices have shot up, and the network got increasingly clogged. This necessitated the Berlin fork, which was more of a stopgap measure for the problem. Interestingly, the price of Ethereum has shot up since then. This is indicative of the direction Ethereum will take once the full upgrade is complete. Ethereum is already the number one platform for Dapps, and once it becomes fully efficient for them, the sky will be the limit for it. Therefore, the current price momentum reflects investors taking positions ahead of the shift to Ethereum 2.0.
Once it happens, Ethereum could easily eat into the markets of all other Dapps platforms currently in the market. This is because it has the network effect, is time-tested, and is probably one of the most decentralized platform blockchains in the market. This is a key factor in the long-term appreciation of Ethereum.
Institutional Adoption of Ethereum
Institutional money flowed aggressively into cryptocurrency over the first quarter of 2021. One of the biggest beneficiaries of this has been Ethereum. Big institutions, including the likes of JP Morgan, have been very bullish on Ethereum and quite vocally so. This has been reflected in the recently rising price of Ethereum. However, the most significant contributor to the current rally is news that VanEck has filled for an Ethereum ETF with the SEC. This has triggered a lot of excitement as investors hope that it will be approved.
If approved, it should trigger a huge upside rally in the price of Ethereum. This is because wealthy investors who may not be very comfortable with crypto exchanges will finally have an option to get some exposure to Ethereum. Besides the much-awaited U.S. ETF, several other countries already have ETFs, and this is playing into the price action. For instance, Canada already has some crypto ETFs, and the uptake so far has been exceptionally strong. As more institutional money buys into Ethereum, coupled with the upcoming upgrades, the price will likely keep making new highs over 2021.
Final Thoughts: How High Will Ethereum Go in 2021?
From a look at its price action, and the fundamentals supporting it, there is no doubt that Ethereum could go much higher. The most likely short-term level for an Ethereum price target in 2021 is $5,000. If it breaks this psychological resistance level, then it could even double. The FOMO that could follow upgrades later in the year might see Ethereum test $10k. Such a price prediction may seem dramatically bullish, but these price increases have already been seen over recent months and years in the crypto space.
Bitcoin rose from under $10k just a year ago to hit a high of $64k. Similarly, it was not long ago that Ethereum was trading at under $100. Today it is trading at over $4k and gaining. With the upcoming algorithm change, even blowing past $10k would not be an impossibility.
What will Ethereum cost in 2021?
Ethereum at the time of writing is currently trading at $4,200. However, if its price action is anything to go by, then $10k by the end of the year is a possibility.
Is Ethereum a good investment in 2021?
With institutional adoption and the upcoming protocol upgrades, Ethereum is a good investment in 2021.
Will Ethereum go down in 2021?
Current fundamentals and price action suggest that Ethereum will not go down in 2021.
What will Ethereum price be in 2022?
Ethereum may well fluctuate between $10k and $20k during 2022.
What is the Ethereum price prediction for 2025?
It is impossible to forecast the Ethereum price years in advance with any serious hope of accuracy beyond saying it will likely be higher than it is now.