Should I invest in Ethereum in 2023?

Ethereum is silver to Bitcoin’s gold and as the second largest cryptocurrency, it accounts for 19% of all crypto market cap. While Ethereum price has been holding quite steady just under 2000 USD; you might be asking yourself: Is now a good time to buy Ethereum? Well, you’re not alone. Let’s have a look at potential Ethereum price prediction for 2023.

After a catastrophic 2022, the crypto market is starting to look more appealing. The largest altcoin Ethereum is one of the most solid performers in the 2023 crypto market, being about 58% up from the start of the year.  Ethereum is not only a very innovative technology in terms of smart contracts, but it is also a fantastic investment. It is less likely to crash and burn than amller altcoins, but it still has the ability to skyrocket and net investors stratospheric returns. Let’s remember – in the last bull run Ethereum (ETH) made a whopping 40x at its peak. Crypto twitter (still feels weird to call it »X« so we’ll stick to good old Twitter) is again full of Ethereum bulls making claims that he price of Ethereum is only going to gain traction in 2023. Should you trust them? Here is what you need to know.

Ethereum leads the crypto market

One significant advantage of Ethereum is that it continues to dominate nearly every sector in the blockchain and cryptocurrency space, from NFTs to decentralised finance (DeFi), the metaverse, and Web3. This is mostly a result of Ethereum’s first-mover advantage because despite the entry of numerous new competitors, Ethereum has continued to lead the market with breakthroughs like smart contracts. Simply put, Ethereum was the first one to join the party.

Consider the NFT market, for instance. With ground-breaking collections like the Bored Ape Yacht Club and the CryptoPunks, which are still among the most expensive NFT collections in the world, Ethereum was the one responsible for the NFT explosion. The Ethereum blockchain hosts all 25 of the top NFT collections. And even though the launch of Ordinals has given Bitcoin some recent success, Ethereum is still the leading blockchain in terms of the amount of NFT sales. That’s exactly what I’m looking for as a long-term investor: a top-tier cryptocurrency with a pronounced competitive advantage and a significant market share advantage.

Is Ethereum deflationary?

One of the most interesting implications of The Merge, when Ethereum went from proof-of-work to proof-of-stake mechanism is the deflationary nature of ETH, as the Ethereum burn rate saw 65.000 ETH burned in just first 3 months of 2023, making it deflationary.

And what does that mean? In contrast to “inflationary” currencies, which see their supply increase over time, “deflationary” currencies experience a gradual decline in supply. Notably, proponents of cryptocurrencies are drawn to deflationary currencies because they think that scarcity will raise the value of their possessions. Since the supply of some cryptocurrencies is dwindling over time, if demand remains constant, their value will increase. For example, Binance Coin (BNB) burns tokens every quarter to control the supply and guarantee a maximum of 200.000 coins. However, because of burning events, there are fewer BNBs available in circulation right now.

Ethereum technical upgrades

Also a very important aspect of price prediction. Apart from The Merge, Ethereum saw some significant improvements recently. Ethereum finished the Shapella upgrade in April 2023, which significantly increased its appeal for crypto staking. The fourth quarter of 2023 will see the arrival of the next significant improvement, provisionally dubbed Dencun. With this update, Ethereum’s storage capacity, scalability, and effectiveness will all be increased. The Ethereum blockchain now aims to handle 100,000 transactions per second, significantly more than any of its main rivals can.

Ethereum price history

To help you understand the fluctuations in the value of Ethereum, let’s take a look at the Ethereum price history:

  • 2015: Ethereum launches as an Initial Coin Offering (ICO). Early investors were lucky as the introductory price was only $0.3 per coin. By the end of 2015, ETH had climbed to around $0.90, marking a threefold increase in just six months.
  • 2016: At the beginning of the year, ETH was worth less than $1, but then the price rose sharply, reaching a high of $18 in March of that year. Then things took a turn for the worse when hackers stole $46 million worth of Ether in an attack. This had a serious impact on sentiment and Ethereum lost almost a third of its value, ending the year at $8.
  • 2017: Fueled by the ICO craze, where Ethereum was the primary platform, ETH started 2017 at around $8 and reached $40 by March. The latter half of 2017 saw a crypto-wide bull run, with ETH reaching an all-time high of over $1,400 in January 2018.
  • 2018: Following the euphoria of 2017, the crypto market entered a bear phase in 2018. Ethereum wasn’t spared, with its price dropping to around $85 by December.
  • 2019: 2019 was a year of stabilization for Ethereum. Starting the year at around $140, ETH saw steady growth, ending the year at approximately $130.
  • 2020: The rise of Decentralized Finance (DeFi) on the Ethereum platform reignited interest in ETH. Prices surged from around $130 in January to over $700 by year-end.
  • 2021: 2021 was a landmark year for Ethereum, with prices reaching new all-time highs. ETH crossed the $4,000 mark in May. The transition to Ethereum 2.0 and the move to Proof of Stake generated significant buzz, keeping the price momentum relatively strong.
  • 2022: The bear market started and Ethereum, along other cryptocurrencies, dropped a significant percentage, touching 1200$. We won’t remind you of the bloodbath of 2022, as your memory is probably still fresh.
  • 2023: After the crypto catastrophic 2022 Etherum showed some helathy and steady recovery, sitting 55% up from January 1st at 1900$ at the time of writing.

How will ETH perform in 2023?

The bullish scenario

Actually, even for the moderate bulls, the price of Ethereum may remain steady in 2023, but it will probably turn bullish in 2024. One such reason is the “MEV-burn” plan. This is a similar bullish catalyst to EIP-1559, which implemented a fee burn and had a significant impact on Ethereum’s value. If MEV-burn is approved, rewards for Miner Extractable Value (MEV) would be burned rather than distributed to validators. At its core, MEV represents the total value that miners can extract (or profit from) by reordering, including, or excluding transactions within the blocks they produce. Think of it as a hidden treasure trove that miners can tap into, beyond the standard block rewards and transaction fees. Although there is no clear date, it’s feasible that this will start to happen in 2024.

ETH staking is a promising indicator: Similar to how interest rates in the real world are viewed as the benchmark of yield for investors, the return on staked ETH is gradually developing into a basic amount of yield in the cryptocurrency markets. This yield, which is currently hovering about 5% annually, offers chances for new financial primitives to be developed using Ethereum’s staking mechanism.Finally, the burning feature of Ethereum that was added in The Merge upgrade is still in use and works to decrease the total amount of Ethereum.

Layer 2 summer

In addition, the Ethereum ecosystem may be ready for a huge event quite similar to the “DeFi summer” of 2020, which was marked by a rise in the number of decentralised finance applications and, consequently, the prices of various currencies associated with DeFi. In 2023, there is talk of an impending “layer 2 summer” that might spark a rush of activity and possibly increase Ethereum’s value. This means multible layer-2 projects might get significant attention, such as Arbitrum (ARB), Optimism (OP), Polygon (MATIC), Loopring (LRC)… The reason for this is in the innovative applications being created and released on layer 2s, because financial solutions that were previously impossible to launch can now be done quickly and cheaply thanks to Ethereum’s security.

Another potential driver of a positive scenario is the growing usage of Ethereum as collateral. We are now seeing many new DeFi protocols coming online that will use Ethereum in this way. This involves increasing integration with real-world assets, additional varieties of stablecoins, and Automated Market Makers (AMMs).

Bearish scenario

According to many crypto analytics, a bearish situation for Ethereum is less plausible given the promising future developments. Such scenario would probably be connected to more general market conditions or heightened regulatory scrutiny. A shock to the macro environment or a strengthening of the regulatory pressure we’ve already seen on crypto would be more the bear case for the entire cryptocurrency market.

Longer-term though, there are some potential growth suprpesion factors. If we think about a bear case for Ethereum over the next 5-10 years, it would be Ethereum failing to continue growing, its product-market fit turning out to be just a niche, and being hampered by legislation, particularly at the ports of entry. This might entail stricter control over fiat on/off ramps, application frontends, or even stricter control over stablecoins.

Ethereum price prediction 2023

Ethereum is trading at $1,720.19 at time of writing. Despite minor fluctuations, the price has been largely stagnant, indicating a potential lack of bullish momentum. In september 2023, Ethereum is expected to trend downwards, potentially touching $1800. By the end of the year, even with potential rebounds, the price might struggle to surpass $2500, quite lower from its all-time high of $4,891.70. The subsequent years post-2023 might see a mix of bullish and bearish trends.

Ethereum price prediction 2024

With Ethereum 2.0 fully operational by 2024, we can expect enhanced scalability and reduced transaction fees. This could make Ethereum more attractive to developers and users, potentially driving up demand and price. If Ethereum 2.0 delivers on its promises, positive market sentiment could drive the price upwards. Conservatively, Ethereum might test the $2,500 mark, with potential spikes reaching $3,500. he continued expansion of the decentralized finance (DeFi) sector and the non-fungible token (NFT) market on the Ethereum platform could be significant price catalysts.

Ethereum price prediction 2025

By 2025, the market will have had ample time to adjust to Ethereum 2.0. If the transition proves successful and the platform sees increased adoption, Ethereum’s price could stabilize around the $3,500 mark, with potential to reach highs of $12,000 at a potential bull run top. As global regulatory frameworks for cryptocurrencies become clearer and more defined, institutional investment in Ethereum might increase, providing a potential boost to its price. On a more bearish note – while Ethereum holds a dominant position, competitors like Cardano and Polkadot are not far behind. Ethereum’s ability to innovate and stay ahead of the curve will be crucial. If it manages to do so, the price could see an upward trajectory. Otherwise, it might face resistance.

Ethereum price prediction 2026

Post the Ethereum 2.0 transition, the platform might introduce more upgrades to enhance scalability, security, and sustainability. These technological advancements could further cement Ethereum’s position as the leading smart contract platform, potentially driving its price upwards. The next crypto bull run might finish in 2026, but if Ethereum continues to dominate the DeFi and NFT sectors, we could see its price stabilize around the $4,500 mark, with potential peaks reaching up to $5,000 or more, depending on market sentiment.

That leaves us just one question…

Is now a good time to invest in Ethereum?

Well, we are not financial advisors but we can tell you that the landscape might be favorable for investing in Ethereum (ETH). Here is why:

1.Ethereum aims to become a decentralized world computer

Imagine a global computer, decentralized and unstoppable, where applications run exactly as programmed without any possibility of downtime, censorship, or third-party interference. Sounds like a sci-fi dream, right? Well, Ethereum is on its way to making this dream a reality.

Ethereum’s vision of becoming a “world computer” is not just a catchy phrase; it’s a paradigm shift in how we perceive and use blockchain technology. By providing a platform where developers can build decentralized applications (dApps), Ethereum is paving the way for a future where centralized servers may become obsolete, and the power is returned to the hands of the users.

2.Rise of DeFi

Ethereum is at the heart of the DeFi movement, which aims to recreate traditional financial systems (like loans and interest) in a decentralized manner, free from intermediaries. The exponential growth of DeFi platforms, most of which are built on Ethereum, showcases the platform’s potential to redefine finance for the digital age.

3.Ethereum is a haven for uncensorable apps

In an age where data privacy and censorship have become hot-button issues, Ethereum offers a breath of fresh air. Its decentralized nature ensures that applications built on its platform are resistant to censorship. This means that no single entity, be it a government or a corporation, can shut down a dApp or control its operations. This uncensorable nature of Ethereum is not just a boon for developers but also for users who value their digital rights. From social media platforms to financial services, the applications are limitless, and the promise of a free and open internet is closer than ever.

4.Ethereum staking

2023 has been a landmark year for Ethereum, especially with the full transition to Ethereum 2.0 and the introduction of staking. Gone are the days of energy-intensive proof-of-work (PoW); Ethereum now operates on a proof-of-stake (PoS) mechanism. This means that by simply holding and “staking” your Ethereum, you can actively participate in the network’s security and earn rewards in return. Staking has not only made Ethereum more eco-friendly but also offers a lucrative opportunity for long-term investors. With the potential for steady returns and the added benefit of supporting the network, staking might just be the cherry on top for potential Ethereum investors.

Conclusion

The price dynamics of Ethereum have been influenced by a myriad of factors, from technological advancements to broader market sentiments. As we approach the end of 2023, specific price predictions for Ethereum have been a focal point of discussion among analysts. Forecasts suggest that Ethereum could potentially reach the $2,500 mark by mid-2023, with some optimistic projections even touching $3,000, given its current momentum and the anticipated developments in the Ethereum 2.0 upgrade. However, it’s essential to note that these predictions are based on current data and trends, and the volatile nature of the cryptocurrency market can lead to unforeseen fluctuations.

For potential investors, it’s crucial to approach Ethereum not just as a speculative asset but as a representation of a broader movement towards decentralized finance and applications. While its price performance is undoubtedly impressive, it’s the underlying value proposition of Ethereum that makes it a noteworthy consideration for portfolios. As always, thorough research, risk assessment, and consultation with financial advisors are paramount before making any investment decisions.

FAQ

What is the price prediction for Ethereum in 2023?

The article suggests that Ethereum could potentially reach the $2,500 mark by mid-2023, with optimistic projections touching $3,000, based on current data and anticipated developments.

How does Ethereum 2.0 impact its investment potential in 2023?

Ethereum 2.0, with its shift to a proof-of-stake consensus mechanism, promises enhanced scalability, reduced transaction fees, and energy efficiency. These improvements could make Ethereum more attractive to both developers and investors, potentially influencing its price positively.

What are the risks associated with investing in Ethereum now?

Ethereum, like all cryptocurrencies, is subject to market volatility. External factors such as global economic conditions, regulatory changes, and competition can influence its price. Investors should be aware of these risks and make informed decisions.

How does the growth of DeFi and NFTs affect Ethereum’s current value?

Ethereum is central to the DeFi and NFT movements. The increasing adoption and growth of platforms and projects in these sectors on the Ethereum network can drive demand and potentially boost its value.

How much will Ethereum be worth in 2024?

Due to the volatile nature of the crypto market is very hard to say, but analysts have made various predictions based on current trends, technological advancements, and market sentiment. Some projections suggest figures ranging from $3,000 to $5,000, while others value ETH at even $10,000 but it’s essential to approach these predictions with caution and conduct personal research.

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