Why did Ether’s price reach $3,600 and what’s next?

Attention is focused on Ether’s short-term prospects after it soared to a new all-time high above $3,600.

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The next few months are exciting and decisive for Ether as its recent all-time high of over $3,600 has increased the focus on the cryptocurrency and its smart contract blockchain, Ether.

As the cryptocurrency market continues to grow over the five months to 2021, the value of both Bitcoin and a plethora of other blockchain projects and tokens, chief among them Ether, is soaring. Ether is the second largest cryptocurrency in the world by market capitalization. Ether has moved strongly over the past two weeks, rising to new highs.

In fact, ETH’s surge in late April was supported by several key factors that led to rapid price gains across the cryptocurrency market. The booming decentralized finance and NFT sectors are considered to be the main reason for the ETH price increase, as most of these technologies are based on the ethereum blockchain. However, the recently implemented Berlin upgrade and the importance of bullish ETH options traders have helped drive ETH prices further up.

The spike in ETH prices has also sparked renewed talk of a fabled “ETH-BTC reversal” that would see ethereum overtake bitcoin as the cryptocurrency with the highest market cap. While this is still a long way off, as Ether’s $410 billion market cap is only 39% of Bitcoin’s $1.06 trillion market cap, Ether is catching up.

This is evidenced by the amount of money investors are pouring into Ether. CoinShares recently estimated that institutional investment managers hold about $13.9 billion in ETH, buying $30 million worth of ETH in the last week of April and about $170 million in the past month.

Cryptocurrency traders, “holders,” ethereum supporters, DeFi and NFT users, and the broader community are all pondering a very obvious question: what’s in store for ETH in the coming months, and will the ethereum network be able to keep up with demand?

Speculative bullishness?
Maria Paula Fernandez, board advisor for Golem Network, a protocol built on the second layer of Ether to facilitate the sharing of computing resources, told Cointelegraph that the next few months will be exciting considering the growth so far.

While she is cautious about giving an immediate price forecast for ETH, Fe Fernandez believes that the upcoming network changes will pave the way for further growth in value across the Ether ecosystem. I’m as in awe of ETH as anyone, so it’s hard for me to make predictions out of caution, but I can safely say that $10,000 ETH is no longer a daydream, but something that could happen.

Fernandez agrees that the price of ETH will definitely go higher in the next two months until the deployment of the hotly debated Ether Improvement Proposal 1559, which will be part of the London hard fork.

While the upcoming EIP-1559 will play an integral role, Fernandez said the utility of Ether has proven to be a better solution for a variety of financial instruments, which is a key driver of ETH prices. “The NFT fever coupled with the DeFi summer of 2020 has brought a lot of new users who will be staying in Ether.” She further added.

“Now that 2021 has proven to be the year of Layer 2 solutions that alleviate the challenges of Ether scalability, coupled with incredible user experience improvements on the application layer, which make it easier to use Ether-based applications than online banking, it clearly proves that Ether is the fuel and hard currency of the open financial ecosystem. “
Nikhil Shamapant, a retail investor and resident physician, recently published a research report titled “Ether, Halved Three Times,” in which he makes the case that he believes the value of ETH will rapidly rise to around $150,000 by 2023.

When asked about the direction of ETH in the coming months ahead of the London hard fork, Shamapant provided Cointelegraph with an extremely bullish speculative prediction for the smart contract blockchain native token.

“It can definitely go higher, and I think we could see the price go up to $10,000, where the bullish price target for ETH starts to be achieved and people start taking profits and exiting. I think ETH will go up to the $10,000 to $25,000 range, and a lot of supply will likely be sold off, at which point there could be some significant pullbacks and consolidation.”
Shamapant’s long-term price forecast for ETH does need to take into account realistic scenarios. If the price of ETH reaches $150,000, the cryptocurrency’s market cap would be about $17 trillion, considering there are 115,764,316 ETH in circulation. Unlike Bitcoin’s limited supply of 21 million BTC, Ether has no supply cap, which is part of the reason why the Ether network is looking to implement an EIP to introduce some sort of deflationary mechanism, such as EIP-1559, but more on that later.

As Shamapant notes in his report, the situation may improve by May, but the current price of ETH and the rapid use of NFT and DeFi are likely to be catalysts for an ecosystem that he believes is still undervalued:.

“NFT and DeFi have demonstrated a clear use case, but we are still in the early stages. the quality of NFT will improve significantly and the availability of DeFi will increase with the improved scalability of ETH 2.0. Yes, in this case, ETH is significantly undervalued.”
Fernandez gave a more nuanced view of the current valuation of the ethereum ecosystem and its native tokens, acknowledging that the ethereum network is finally realizing its potential, which is reflected in the price of ETH: “I don’t think the network is undervalued. It was definitely undervalued before, and throughout the bear market, but I think it’s now getting the recognition and visibility it deserves.”

London hard fork coming soon
The London hard fork of the ethereum blockchain is expected to take place in July and will introduce EIP-1559. the upgrade is both controversial and highly anticipated as it will make changes to the structure of fees paid by users and earned by miners.

Nick Johnson, lead developer of Ethereum Naming Service, explained to Cointelegraph that EIP-1559 will make some important changes to how fees are calculated and paid on the blockchain.

“It [the London hard fork] will include EIP-1559, the much-anticipated improvement to the transaction fee market, which will have a huge impact on the user experience of sending transactions on a crowded network. It will also make it possible for smart contracts to receive a ‘base fee’ – effectively the gas fee for the current block – which will enable projects such as gas price derivatives and tokens.”
The main reason EIP-1559 is also considered controversial is its built-in ETH destruction mechanism, which will destroy some of the ETH used to pay for the associated transaction fees. this has caused a lot of anger among ethereum miners, as charging transaction fees has traditionally been a key incentive for miners to maintain the ethereum network by confirming transactions and packaging them into blocks.

While EIP-1559 has met with some opposition from miners, the benefits it brings could have a positive impact on ETH prices and increase interest in ETH due to the explosive growth in the use of the DeFi platform and decentralized applications in recent months.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/why-did-ethers-price-reach-3600-and-whats-next/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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