Why did the price of Ether reach $ 3,500? What’s next?

The coming months promise to be exciting and decisive for Ether (ETH), as the recent all-time highs of over 3,500 US dollars place an even stronger focus on the cryptocurrency and the smart contract blockchain Ethereum.

As cryptocurrency markets continue to grow for five months in a row in 2021, both the standout Bitcoin (BTC) and a number of other blockchain projects and tokens have risen in value, most notably ether. The second largest cryptocurrency by market capitalization has seen a fortnight on the upswing and reaching new heights.

Indeed, ETH saw a surge in late April, aided by several key factors that led to a rapid rise in prices in the cryptocurrency markets. The burgeoning DeFi sector as well as the burgeoning space for non-fungible tokens (NFTs) were cited as the main reasons for the price boom at ETH, as these technologies are mainly based on the Ethereum blockchain. However, the importance of the recently implemented Berlin upgrade and the optimistic traders of ETH options have helped raise the network’s token price even further.

Why did the price of Ether reach $ 3,500?  What’s next?
Why did the price of Ether reach $ 3,500? What’s next?

The ETH price boom has also led to talk of a legendary “flippening” of ETH-BTC, in which Ether would outperform Bitcoin as the most valuable cryptocurrency by market capitalization. While there is still a long way to go, Ether’s market cap is $ 411 billion corresponds to only 39% of Bitcoin’s market capitalizationWith USD 1.06 trillion, ETH is catching up more and more every day.

This can be seen in the large amount of capital that investors invest in ethers. CoinShares recently estimated that institutional investment managers and corporations hold about $ 13.9 billion in ETH, with $ 30 million bought in the last week of April and about $ 170 million in the last calendar month.

The question posed by cryptocurrency traders, hodlers, Ethereum advocates, DeFi and NFT users, and the wider community is obvious: What does ETH expect in the coming months and can the network keep up with demand?

Speculatively bullish?

MarÃa Paula Fernández, adviser to the board of directors of Golem Network – a protocol based on the second layer of Ethereum that facilitates the sharing of computing resources – told Cointelegraph Given the growth so far, the next few months will be exciting.

Although she was cautious in making a simple price prediction for ETH, Fernández believes the upcoming changes to the network will pave the way for further growth in value across the Ethereum ecosystem: “I’m just as in awe of everyone, so out of caution I have a hard time making predictions, but I can definitely say that $ 10,000 for an ETH is no longer a pipe dream, it’s something that is likely to happen.“”

Fernández agrees that ETH’s price could surely go up in the next two months, pending the launch of the much-discussed improvement proposal for Ethereum 1559, which will be part of the London fork.

While the upcoming EIP-1559 will play a major role, Fernández said that the usefulness of Ethereum has already proven to be a better solution for various financial instruments and that this is a major driver of the price of ETH. “The NFT rush coupled with DeFi Summer 2020 brought a lot of new users and they are here to stay.”. He added:

“Now, 2021 has proven to be the year of Layer 2 solutions, which has eased Ethereum’s scalability challenges, and this coupled with the incredible improvements in UX at the application layer that make it mine. It’s simple to use an Ethereum. based application that makes clear, for example, online banking, ETH as fuel and hard money for the open finance ecosystem. “

Nikhil Shamapant, a private investor and medical resident, He recently published a research report titled “Ethereum, The Triple Halving,” in which he argued why he believes ETH could see a meteoric rise in value to around $ 150,000 in 2023.

When asked where ETH could go in the next two months before the London fork, Shamapant provided Cointelegraph with an extremely bullish and certainly speculative prediction for the native blockchain token with smart contracts.::

“It can definitely go a lot higher. I think we can see the price hit $ 10,000 where a lot of bullish ETH price targets start and people take profits. I think we will go into that 10-10 range . ” $ 25,000, we’re going to have a lot of supply and we might see some big pullbacks and consolidations at this point. “

Shamapant’s high prediction of the long-term price of ETH should be put into context. If the price of ETH reached $ 150,000, the market capitalization of the cryptocurrency would be around $ 17 trillion, considering there are 115,764,316 ETH in circulation. In contrast to Bitcoin’s finite supply of 21 million BTC, there is no upper supply limit for Ether. This is part of the reason the network wants to implement EIPs that introduce some sort of deflation mechanism, such as: B. EIP. -1559 – but we will explain more on this later.

As Shamapant explains in his report, things could accelerate from May onwards, but the current price of ETH and the increased use of NFT and DeFi could be the catalyst for significant growth in an ecosystem that you think is still underestimated::

“NFTs and DeFi have shown a clear use case, but we are still in the early stages. The quality of NFTs will increase dramatically, the ease of use of DeFi will improve with the improvements in scalability of ETH2.0 – and yes, ETH is in.” dramatically undervalued in this context. “

Fernández gave a more subtle look at the current valuation of the Ethereum ecosystem and its native token, admitting that the network is finally reaching its potential, which is reflected in the price of ETH: “I don’t feel like the network is undervalued. It was definitely undervalued before and across the bear market – but right now I think it’s getting the recognition and visibility it deserves. “

London on the horizon

The London fork of the Ethereum blockchain is expected to take place in July and introduce EIP-1559. The update was both controversial and eagerly awaited as changes are made to the structure of the fees paid by users and earned by miners.

As Nick Johnson, lead developer of Ethereum Naming Service, a naming service for Ethereum wallets, told Cointelegraph, EIP-1559 will introduce some important changes in the way commissions are calculated and paid on the blockchain::

“The London Hard Fork will include EIP-1559, the long awaited transaction fee market transformation that will have a huge impact on the user experience when sending transactions on a congested network. It will also enable smart contracts to be obtained on the ‘base commission’ – effectively the cost of gas of the current block – which enables projects as they result from the price of gas and tokens “.

The main reason EIP-1559 has also been dismissed as controversial is the built-in ETH burning mechanism that destroys part of the ether that is used to pay the associated transaction fee. This had Ethereum miners on the warpath, as receiving transaction fees has traditionally been a major incentive for miners to keep the network going by confirming transactions and grouping them into blocks.

Although EIP-1559 met resistance from miners, the promised benefits of lower rates are likely to have a positive impact on price and lead to even greater interest in ether, which was downright astronomical with the explosion of DeFi platforms and the use of decentralized applications in the last few months.

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