Ether, the native currency of Ethereum, is beginning to regain ground after a massive sell-off and, I predict, will surpass its previous all-time highs of $4,000 by the end of the year.
The price of the world’s second largest cryptocurrency by market capitalisation fell to $2,600 at one point last week, as traders dumped digital assets following global stock market jitters triggered by debt problems facing one of China’s largest real estate developers, and also by the country’s central bank saying – once again – that trading in crypto is illegal in the People’s Republic.
However, by early Monday it had rebounded back above $3,000 as the bulls showed determination to see off the bears and hold the critical support level.
Despite the volatility, I am confident that Ether will maintain its recovery to the extent that, by the end of 2021, the digital currency will beat its all-time high hit in May this year when it jumped nearly seven per cent over 24 hours to touch $4,141.99.
There are five main drivers for my bullish Ether prediction.
First, it has a great potential for ‘real use’ because Ethereum, the platform on which it is the native cryptocurrency, is the most in-demand development platform for smart contracts, thereby highlighting the network’s value not only as a platform for developers but as a worldwide financial utility.
Second, traders are extolling the virtues of the transition to ETH 2.0, which makes the Ethereum network significantly more scalable, sustainable and secure. These upgrades are a considerable boost not just for Ethereum but for blockchain technology itself.
Third, the soaring demand for NFTs, or non-fungible tokens, which are becoming an integral part of the tech investment megatrend. NFTs are digital collectibles that are encoded onto a blockchain, creating a unique digital watermark showing ownership and the digital rights to that collectible.
In recent months many major global sports franchises, fashion brands and household name artists and musicians have launched NFTs. And the interest in NFTs is only set to grow as millennials and Gen Z especially have digital lives and it’s natural to want to take digital representations into these worlds – and now they can – and this has value.
This will fuel the price of Ether as almost all NFT transactions are based on Ethereum.
Fourth, the heightening expectations that DeFi (decentralised finance) is set to increasingly take on the traditional financial system – and the vast majority of of DeFi applications are built on Ethereum’s blockchain technology.
And fifth, there is a massive surge in institutional investment interest. This has been backed up by research published on Monday by Wall Street giant JPMorgan that found that investors have begun moving out of Bitcoin futures and into Ethereum in a “strong divergence in demand”.
The 21-day average Ethereum futures premium rose to one per cent over actual Ether prices, according to Chicago Mercantile Exchange data cited by JPMorgan. “This points to much healthier demand for Ethereum versus Bitcoin by institutional investors,” says the report.
Against this backdrop, I think it’s reasonable to expect Ether’s price to soar – although not in a straight line – over the coming months, that it will galvanise its already strong position against rivals like Bitcoin, and that investors are likely to enjoy previously unseen price highs.
deVere Group CEO and founder