Ethereum’s native token ether (ETH) has experienced significant levels of volatility but there are indications that its price could resurge into 2023 and beyond. So, what are the factors that could drive an increase in the price of ETH?
Background to ETH
Ethereum is a decentralized, open-source blockchain and ETH is the primary token on the network. ETH was launched in 2015. Since then, it has experienced significant levels of volatility, with the price ranging from $0.311 at launch to nearly $4,900 in November 2021 and back down to around $1,600 in September 2022. As with bitcoin, the price of ETH is influenced by supply and demand. Long-term, ETH has outperformed certain traditional investments, including some leading stock indices.
Factors expected to influence ETH’s price
One key development has been the well-publicized Ethereum Merge event, preparations for which began in December 2020 and which was executed on 15 September 2022. Essentially, the merge of Ethereum 2.0 (Beacon Chain) with the Mainnet moved the Ethereum network from a proof-of-work (POW) consensus mechanism to a proof-of-stake (POS) model. POS is more sustainable, using 99% less energy than POW, while allowing the Ethereum network to scale, and helping it to eventually reach 20,000 to 100,000 transactions per second, up from around 10 to 30.
While the merge is not expected to impact the shorter-term price of ETH, over the longer term, it could help to lift the price due to the benefits of the POS model. This offers quicker transactions and lower fees, as well as providing the foundation for future upgrades to speed and ecosystem development. Additional investors attracted to ETH to carry out transactions on the Ethereum network could reduce the supply and increase the price.
A second factor that could influence the price is ongoing global financial instability. While cryptocurrencies have been widely viewed by investors as riskier financial assets, this could change amid a more uncertain widespread economic outlook.
ETH price forecasts for 2023 and longer term
Read any digital currency blog or website that covers ETH and it’s clear that forecasts for 2023 do vary. However, they largely indicate that the price will increase in the coming year, and continue to do so in subsequent years.
Forecasts range from a bearish $1,918 to a bullish $3,775 by end-2023, with an average of $2,847 on certain sites. Other forecasts are less optimistic, predicting the price of ETH will reach $1,808 by mid-2023 before falling back to end the year at $1,565. Meanwhile, CEO and founder of non-custodial platform Allnodes, Konstantin Boyko-Romanovsky, believes ETH could hit $5,000 in 2023, as a result of the Ethereum 2.0 upgrade.
Beyond 2023, longer term ETH price forecasts also vary, again indicating the inherent uncertainty and instability. Predictions range between $3,195 to $6,207 by the end of 2024, and between $5,366 and $10,642 the year after.
Factors driving optimistic forecasts include the anticipated roll out of Ethereum exchange traded funds and the further development of ETH 2.0. Lower-end estimates are based on uncertainties around potential regulation of the crypto market.
Overall, the varying price predictions indicate the volatility of ETH will continue, albeit on a mostly upward trajectory, influenced by factors including the success of Ethereum 2.0.
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