Ethereum Price Predictions: Why User Bias Could be Skewing the Numbers
Following the 2017 crypto boom, everyone suddenly became an expert in analyzing financial commodities. When the market was red-hot and every new coin was surging regardless of its actual value, it wasn’t hard to make predictions. As long as someone hedged their bets but ultimately said that the price of XX coin was going to rise, they were often correct. Unsurprisingly, as the hype has died down and market valuations have regained a sense of reality, the aforementioned fortune tellers have been exposed. Of course, there are those that are more than capable of making accurate price predictions. However, there are still plenty of inaccurate forecasts being made.
In recent weeks, some of the more outlandish predictions have revolved around the price of Ethereum. Although Vitalik Buterin’s cryptocurrency still has the second highest market cap behind Bitcoin, a recent bearish trend has shown it’s not immune from the current crypto slump. However, despite the obvious signs that another boom isn’t on the immediate horizon, Ethereum’s co-creator Steven Nerayoff has said that the price of ETH could triple in 2018.
“What you’re seeing with Ethereum is exponential increase in the number of projects — there are billions of dollars being poured into the ecosystem right now — maybe 10 times more projects this year than last year, which could easily lead to a doubling, probably a tripling in price by the end of the year,” Nerayoff told CNBC in January.
Market Sentiment Suggests 3X Growth is Unlikely
Given how the markets have been moving since January, this forecast seems a little off. As any investor knows, comments from someone directly involved in a project have to be downregulated because of personal bias. However, even if we account for this, the projection still doesn’t seem to follow the movement of Ethereum price charts in 2018. After starting the year with the $755 range, ETH price peaks throughout January. However, after topping out at $1,404.34, the price of Ethereum began a steady downward trend.
Despite some inevitable peaks and troughs, the value as of August 3 was $409.64. Now, if Nerayoff was making his prediction today, he may have been slightly closer to the mark. However, his bullish sentiment came during Ethereum’s 2018 peak, which means he was looking towards the $3,000 mark. In today’s climate, that’s highly unlikely. Indeed, if we consider the recent remarks from Buterin, we’re currently at the tail end of a crypto bubble. Although investors would love to see a repeat of last year’s boom, the general bearish trend across all cryptos would support the theory that we’re on the edge of a bubble.
Improvements Are Crucial Ahead of Mass-Market Adoption
Another problem Ethereum is facing at the moment is stability. Increasing gas prices have become a cause for concern among active users in recent months. With miners taking longer to process transactions and users not having an incentive to pay more gas (i.e. it won’t dramatically speed up the transaction), the network has become less user-friendly. From a technical perspective, this is obviously a problem and something Bitcoin has faced as it’s become more popular. However, it also raises issues over Ethereum’s long-term potential. A recent report from Imperial College suggests that scalability and usability are necessary if a crypto wants mainstream acceptance.
As could be argued for all coins, mass-market adoption is the ultimate goal. If that happens, prices would soar as Ethereum et al would be seen as replacements for fiats. However, as the gas issue has shown, even the highly touted Ethereum is still a fledging technology that’s far from perfect. In fact, there are also issues outside of the network, such as Twitter scams, that are also affecting its overall appeal. Of course, things don’t have to be perfect to become socially accepted. However, it does seem as though it’s not quite ready yet.
Based on this, it would be fair to say that getting back to the $1,400 mark by the close of 2018 is unlikely. Having more projects on the Ethereum network is fantastic, but the real gains come when casual investors are enthused. Indeed, if 2017 taught us anything, it was this. Where can the price of Ethereum go in the next few months? Given the current trend, some sort of stabilization around $400 is likely before it rallies towards the end of the year. Will the value triple? Possibly not, but that isn’t to say ETH couldn’t break the $2,000 mark in 2019 if its creators continue to innovate.