Ethereum has hit four-digit rates for the first time in three years. The short-term price driver could be the start of futures trading on the CME in early February.
Bitcoin achieved an increase of around 300 percent in the past year. Ethereum was able to clearly outperform this performance with a plus of around 470 percent. In the chart below you can see that the price of Ethereum has more than doubled compared to Bitcoin since the beginning of 2020. After the peak at the beginning of September, the price fell significantly again and reached a low point on Christmas days. At the beginning of the year there was now a jump in prices. Yesterday and today the price exploded by up to 50 percent against the Bitcoin (see the ETH / BTC annual chart below). On a dollar basis, it had already reached prices of over 1,150 dollars in Asian trading this morning and thus for the first time in three years again four-digit prices. It is foreseeable that the price will also hit the all-time high of over $ 1,400 in the near future.
A year ago, we highlighted Ethereum as the top favorite among the big coins for 2020. The chances that this will also apply in 2021 are very good. Even if Ethereum clearly won against Bitcoin in the past year, it looks very different in a long-term comparison. Since the high in early 2018, Ethereum has still lagged far behind (see the ETH / BTC long-term chart below). It is not necessarily to be expected that the all-time high of around 0.115 BTC from January 2018 will be reached again. From the current level of 0.0328 BTC, there is still room for improvement. A doubling of the valuation compared to Bitcoin is by no means unrealistic.
Ethereum price driver
A short-term price driver could be the start of futures trading in Ethereum on the American futures exchange CME. In a month’s time, trading will start on February 8th. So far, only Bitcoin futures have been traded on the CME. Large and institutional investors prefer futures trading on the regulated American stock exchange. After the institutional interest in Bitcoin had recently increased very strongly, Ethereum, the second largest cryptocurrency, could benefit from this effect.
The brakes could be the significantly higher gas prices, which make transaction fees more expensive. The average transaction fee has risen to very high levels again, making smaller transactions completely impractical. In the short term, the success of the network therefore also has negative consequences. This is a consequence of the DeFi boom, which has clearly gained strength again.
In the longer term, however, the scaling problems will be solved with the implementation of Ethereum 2.0. Phase 0 of the update began at the beginning of December. The opinions of the experts differ as to when the conversion will be completely successful. We are talking about two or more years before a complete changeover. However, other solutions are expected to alleviate the scaling problem earlier. Since, as with stocks, prices anticipate developments in cryptos, the price of Ethereum should continue to rise in anticipation of these improvements. Especially since Ethereum will maintain its position as the undisputed market leader in smart contracts, just as Bitcoin will remain the leader in digital gold.
