DeutschEthereum (ETH) has been considered a major “opponent” for the leading cryptocurrency Bitcoin for years. Even if this may seem different with a view to the price per Ether coin and the market capitalization: In many respects, the ETH ecosystem is characterized by some properties that certainly suggest that Ethereum could increasingly outperform BTC in various points in the long term. Above all, it is the smart contracts belonging to the system that attract many investors and users. In addition, at the end of 2020 there was the starting signal for ETH 2.0, which could again become an important trigger for a stronger positioning in the area of cryptocurrencies and blockchain systems. Even if the conversion to the new approach is to be carried out in several phases and the old blockchain is to continue to exist: Ethereum’s chances are good to continue to gain in importance.
Important reasons for the new Ethereum boom in 2021:
- Revenues in the network have recently risen rapidly
- Ether returned to the area above $1,000 in 2021
- more and more companies are joining the network
- institutional investors are developing increasing ETH interest
- ETH 2.0 will gradually bring new & easier possibilities in the network
Ethereum Starts with Great Success into the New Year
The second most important digital currency after the market capitalization (01/20: temporarily well over 100 billion US dollars) had initially said goodbye to its record values in the middle of 2018 after the high flight at that time. What followed was a significant consolidation until the end of 2018. At this time, the ETH price had even fallen below the threshold of 100 USD in phases. 2019 was then marked by several highs and lows. On the first weekend of 2020, the ETH Coin was now trading at around 820 US dollars. In the past quarter, in turn, the price climbed from just under 350 USD to the one mentioned. Thus, the currency of the Ethereum ecosystem recorded an increase of more than 134 percent. Within a week until 03.01.2021, in turn, the course secured a plus of around 29 percent.
All-time High within Reach
These developments of the past months are already an important indicator for many analysts of what the newly started year could bring for Ethereum. And it got even better. In the first week of January, Ether even rose towards the $1,000 mark and later left it behind. A price analysis in the actual sense is not to be made at this point. The focus is on the logical arguments why 2021 can be the year of the final breakthrough for Ethereum. Insiders find several potential triggers for a possible high flight in the coming 12 months.
- Ethereum
(ETH) - Price $4,186.57
- Market Cap
$505 B
Ethereum in High Flight, as BTC Showed Weakness
One reason why ETH could experience a new boom in 2021 can also be found elsewhere. Apart from the actual positive signals for Ethereum itself. 2020 was the year of institutional investors. They have entered the Bitcoin market on a large scale and recently caused a new all-time high of well over 30,000 US dollars. Several leading connoisseurs of the crypto market now expect that 2021 could become the “Ethereum year” in a certain year. The changes in the Ether price can certainly be understood here as an indication of the correctness of these expectations. Investors should not be deterred by corrections. In the still largely unregulated area of digital currencies, high volatility continues to be part of everyday life.
Nevertheless, Ethereum actually seems to be on its way to a promising new year these days. This is supported, among other things, by the fact that the ETH course was able to survive the turn of the year unscathed in contrast to the BTC course.
New ETH Products could Drive Mainstream Acceptance
Experts such as Ryan Watkins from the analysis company Messari see, among other things, the start of derivative products based on cryptocurrencies on various exchanges as an indication of rosy times. The Chicago Mercantile Exchange (CME) is one of the providers that published plans related to Ethereum some time ago. For example, the CME wants to bring Ether futures to the market from the beginning of February this year. Numerous institutional investors have so far been reluctant to invest in pure crypto exchanges. The introduction on established trading venues such as the CME could result in a rapid rethinking here. The latest price movements after the news from CME, which was only announced last month, are an indication of this.
Large Investors Become an Important User Group for Ethereum
Watkins even went so far in current forecasts to say that he expects a noticeably faster Ethereum adoption by large investors than in the case of Bitcoin. Precisely because heavyweights from the investor landscape understand the Ethereum inclusion in the portfolio of renowned exchanges as a sign of the increasing legitimacy of the currency. Ultimately, these are interactions. If Ethereum – for example in the form of futures contracts – is listed on large exchanges, the Ether interest on the part of institutional investors increases. Conversely, exchanges and trading venues are more likely to tend to include ETH if a clear larger demand is emerging in this investor group. We are apparently in such a phase at the moment.
Ethereum Serves more and more DeFi Projects as a Technological Basis
The fact that at the beginning of the year the boom in the area of decentralized finance (DeFi), which has been existing for a longer time, massively expanded again within the first days of the new year, is also a key moment for Ethereum. The “Total Value Locked” – the so-called locked total value – in the area of DeFi increased by more than 31 percent in just four days since the end of 2020 until the editorial deadline. If the total value of the DeFi projects was still at about 14.26 billion US dollars on the first day of 2021, the volume on 04.01.2021 was already at more than 18.8 billion US dollars. For a large number of DeFi developments, the ETH blockchain represents the indispensable technical foundation. Accordingly, Ethereum could clearly benefit from the continuing trend towards decentralized exchanges and other projects in the sector.
Daily Ethereum Sales Already Increase Significantly in 2021
For the quoted crypto specialist Evan Weiss, one thing is obvious. Many companies and institutions still misjudge the possibilities for Ethereum application for their own business. The currently noticeably increasing daily sales in the network in the billions could open important doors here. Provided that institutional investors know how to interpret these correctly. The portal CryptoFees recently came to the conclusion that about four billion were implemented per day in the ecosystem. In addition, Ethereum is now the most used blockchain worldwide. Even Bitcoin does not show comparable results. Weiss sees another reason why ETH will experience a boom in 2021 and an influx from the sector of institutional investors could occur. What is meant is the gradual transition of the protocol to the Proof-of-Stake procedure.
Implementation of the ETH 2.0 Phases Will be of Crucial Importance
ETH 2.0 is processed in several phases. In the end, the dominance of Chinese miners known from the Bitcoin system will be broken. In the future, ETH should no longer be “ruled” only by some large members of the community. In addition, large investors can later get involved in the ETH security mechanism more easily and quickly through the change of procedure than is the case to date. However, this initially requires a comprehensive ETH 2.0 implementation. This will still take some time. But the first step has been taken. The fact that the easier participation is possible in the new concept is due in particular to one point. Capital-strong investors can also get involved in ETH 2.0 even if they do not have often costly hardware. Also the energy demand / consumption will be much lower. This creates incentives that could help Ethereum to plenty of growth in the new year. For the expert Weiss it is already clear: Large investors will take advantage of the opportunities through Ethereum staking.
Participation in the ETH System Will Become Easier in the Future
There are also many hopeful comments in the community, even if there are some critical statements about ETH 2.0. In many analyses, the better conditions in the area of scalability play a central role. Problems of scaling from the past should soon be history when the upgrade is fully completed. If the step succeeds, the “new version” of Ethereum will conversely also benefit the area of Decentralized-Finance (DeFi) on the one hand and the sector of Non-Fungible-Token on the other. However, the change is not entirely without risk, if one believes the statements of various industry experts. Finally, there is at least in parts a competition between some DeFi projects and the upcoming approach for Ethereum 2.0 staking. The consequence could be that funds from the DeFi division are withdrawn for the benefit of staking in the ETH network. For Ethereum, this would of course be positive once again and could further strengthen the expected boom.
Ethereum Continues to Benefit from the Growth of the General Crypto Market
Even if it will take a while until the further steps towards ETH 2.0 take place, the first changes speak for continued growth of the Ethereum network as a whole. This will then probably equally influence the trend of the ETH course in the coming weeks and months. Finally, the overarching movements of the crypto market as a whole in the past year 2020 can be understood as a finger pointing to further development. The total market reached an impressive increase of more than 280 percent in the last year. Increasing parallels to the international stock market, which in turn showed some high flight especially in many technology values, fuel the hope that ETH like many other cryptocurrencies will experience an exciting, positive 2021 with a boom.
More and more Ethereum Partnerships Promote Acceptance
Finally, two further aspects for the Ethereum network should be mentioned. The ever new rescue packages of the states worldwide in the fight against the Corona pandemic have been causing increased inflation fears among investors for months. When central banks put huge amounts of money into circulation, this leaves clear traces sooner or later. Already now, the leading cryptocurrency Bitcoin is considered by many investors as a safe haven next to the precious metal gold was the case. Ethereum could also be the big winner next to BTC if traditional asset classes continue to lose profitability. The fact that more and more large corporations from Microsoft to Intel and in particular representatives of the global industry and the financial services sector are joining the partner network of the Enterprise Ethereum Alliance (EEA) can also promote a stronger ETH adaptation in the “mainstream” in 2021. Many companies finally understand the ETH blockchain as a useful technology for global supply chains and other processes.
Not to mention the already recognizable increase in demand for Ethereum as the second most important Cryptoverse ecosystem. The current price movements are not only pleasing for investors who are already recording high profits. Also investors in spe will pay more attention to Ether as a cryptocurrency. Because there are many signals that speak for further high price gains. In view of the mentioned positive properties, it is no wonder that many fans are firmly convinced that Ethereum will experience a new boom in 2021.
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