Ethereum is the second-most popular cryptocurrency according to market capitalization, a position that is second the only other cryptocurrency, Bitcoin. The price of Ethereum is determined by the cryptocurrency’s demand and supply, similar to how prices for stocks are determined. Check out the reviews to know why the Ethereum price is reducing.
As opposed to the stock market, Ethereum doesn’t have revenues, profits, or any formal balance sheet. It’s challenging to establish the actual price that is Eth tokens. While it is difficult to determine value, Ethereum still holds intrinsic value. Ethereum tokens are essential to transact on Ethereum’s blockchain, which supports various financial services.
Ethereum’s price has risen much more quickly in the past year than Bitcoin’s. This is despite Bitcoin being more than twice its previous record high of $19,800. Since March last year, the value of Ethereum has increased by more than 1,200 percent. What exactly is Ethereum and what is the basis for Ethereum’s price?
How is Ethereum Value Determined?
The supply and demand of cryptocurrency determines the price of Ethereum. Like the stock market, cryptocurrency markets also have order books that include purchase and sale orders. The increased demand for Ethereum will increase the price, and an increase in the sell demand will bring the price lower.
Contrary to Bitcoin, Eth tokens have greater intrinsic value. This is because Eth tokens are required to make transactions on any decentralized application and are developed upon Ethereum. Ethereum blockchain. When more transactions using Ethereum happen, the cost of transaction charges rises because transaction fees depend on the supply and demand.
How High Can the Price of Ethereum Go?
In the past, the price of Ethereum is more unpredictable than that of Bitcoin’s. If you choose to invest with Ethereum in place of Bitcoin, it will increase the risk of gaining more upside potential.
Confident investors believe that the market value of Ethereum will exceed Bitcoin’s value due to the variety of usage applications for Ethereum. Some analysts forecast that Ethereum could reach $10,000in the next few years. In the 2017 bull-run, Ethereum price prediction was around 0.1 Bitcoin per token. If we could achieve this percentage again, Ethereum would be trading at $3,850, based on the current value of Bitcoin.
But, it’s unlikely Bitcoin may have reached the highest point in the current bull market. In the the past, Bitcoin has increased about 20 times its value every cycle. Bitcoin will need to grow five times the rate of this bull run to be worth $100,000. If this occurs and Ethereum gets back to its pre- Bitcoin percentage, Ethereum would be trading for $10,000 per token.
What Affects the Price of Ethereum?
Many factors affect the demand and supply of Ethereum. As mentioned previously, the supply of market and the need of Eth tokens is the only thing that determines the value of Ethereum. The significant factors that impact the demand and supply for Ethereum are listed below.
- Eth 2.0 staking is an improvement to Ethereum’s blockchain, allowing you to stake Ethereum to earn interest. It is a new feature of the Eth 2.0 system is in the early stages of development, but there is already more than $1 billion worth of Eth secured in staking which has reduced the supply of the cryptocurrency.
- Coverage of the media has a vital role in driving demand for cryptocurrencies. Although the majority of mainstream media coverage is focused on Bitcoin, only a few have yet to broadcast Ethereum to the general public.
- The price of Bitcoin affects the market for cryptocurrency overall. If Bitcoin is in a positive mood and the market is bullish, other coins similar to Ethereum will be, too.
- A high volume of transactions increases that amount of charges on Ethereum’s blockchain. These charges go to Ethereum mining companies who typically sell their tokens to the market, increasing the amount of Eth. However the more Eth tokens are needed in cases of transaction fees that are more expensive since you have to have Ethereum in order to pay transaction fees.
- Ethereum-based tokens increase Ethereum’s use. Developers can code smart contracts with Ethereum to build decentralized applications that typically contain the company’s personal ERC tokens. However, Ethereum tokens are still required to make transactions on the Ethereum blockchain, increasing the need for Eth.
Is Ethereum a Good Investment in 2021?
In January of this year, Ethereum was trading for about $730, which is just a fraction of its current price. Ethereum is a good option for investors who are tolerant of risk and wants for a way to diversify his portfolio.
The decentralized financial system has recently attracted interest from investors following the trade halts from the recent Gamestop (GME) pumps. Since no single entity can manage these platforms, they cannot be compromised by the institutions. Decentralized exchanges such as Uniswap (UNI) and ZRX (ZRX) have nearly doubled in value in the past few weeks as investors begin to realize the potential of DeFi.