Ethereum: After the correction, What future in 5 years?
A violent correction is hitting Ethereum and the cryptocurrency market right now. Price direction appears indecisive, and assets are struggling to regain their All Time Highs. Is this the start of the bear market? In the midst of the panic, it is good to recall the long-term forecasts of the greatest analysts on the planet.
We will see the reasons that lead Goldman Sachs or Jurrien Timmer of Fidelity to see Ethereum as the big winner in cryptocurrencies. Then you will get a technical analysis of ETH in the current correction, in the next few months and very long-term goals for the next 5 years.
Currency Of The Future
Ethereum is one of the most powerful currencies in the cryptocurrency ecosystem. One of the largest banks in the world, Goldman Sachs has acknowledged this to be the most promising project. But not only. It is also a real ecosystem that can play a major role in future technologies. For example, smart contracts, NFTs and the art market.
The bank believes that ether “currently appears to be the cryptocurrency with the greatest potential for actual use, as Ethereum, the platform on which it is the native digital currency, is the most popular development platform for applications. of smart contracts ”, according to the note.
Finally, DeFi is one of the most interesting and overwhelming points of crypto currencies. Decentralized Finance could totally change the way finance works, removing the middleman. And thus by causing the bankruptcy of banking institutions, which would be outdated and obsolete. Decentralized organizations would then replace the latter in the coming years.
Some major issues still stand in the way of Vitalik Buterin, the co-founder of ETH. If the layers 2 type solutions, which will allow a greater scalability of this currency, are not yet implemented, their arrival could well be a game-changer. Another element to watch is the switch from PoW to PoS that will change the face of Ethereum, with the arrival of Ethereum 2.0.
This is the analysis made by Jurrien Timmer, Director of Global Macro at Fidelity Investments:
The price of Bitcoin has tracked the size of its network very closely (i.e. its price is rational), but the same is not true of ETH. If ETH traded at the same multiple as its network (let’s call it the price / network ratio), ETH would be 10 times higher than its current price.
According to the analyst, ETH is not rewarded for its scalability. And the reason is simple, Ethereum does not have the same rarefaction properties as Bitcoin.
Ethereum’s supply is 6 times that of Bitcoin and growing twice as fast. Bitcoin has a predefined supply limit of 21 million coins, but Ethereum has no such limit.
Will Ethereum 2.0 change that? It’s possible !
Prediction For Ethereum In 5 Years
Based on a comparison with the price of Bitcoin, the Price of Ethereum would be undervalued. Taking into account the development of the network, which is the key point of the Goldman Sachs study, the price of Ethereum should therefore be much higher than its current price.
Jurrien Timmer’s demand curve for Bitcoin and Ethereum
According to Jurrien Timmer, the price of Bitcoin follows the demand curve unlike that of Ethereum.
If the price of Ethereum started to follow the demand curve, the prediction for Ethereum in 5 would be $ 9 million. And the 2035 horizon may well see an ETH at over 100 million.
And Ethereum 2.0 may well change that. In the coming years, with the new deflationary system, the supply of ETH in circulation will decrease. A phenomenon that has already started with the burn of many Ethereum tokens.
ETH is undergoing an upgrade (aka EIP 1559, Ethereum 2.0, London Hard Fork) and will change from a Proof of Work (PoW) model to Proof of Stake (PoS). The bullish rhetoric is that this will limit further growth in ETH’s supply, as coins are staked (and withdrawn from circulation) and fees are burnt. This could lead to more pronounced disinflation.
It’s not that ETH’s supply growth was rampant before ETH 2.0 (it wasn’t), but the lack of certainty about future supply has kept ETH at a low. lower price than BTC. The price ratio of BTC is 1,226 times a million addresses, while ETH is 51 times.
ETH Technical Analysis
Today ETH, the Ethereum cryptocurrency token has undergone the correction along with the wider market. Today’s loss is 8.87% for the entire market, excluding Bitcoin. It is 8.22% for the whole including Bitcoin. Although these numbers may change during the day, it gives some indication of this correction.
First of all, the gap between Altcoins and Bitcoin is very small, if not nonexistent, which is reassuring. During large bear market corrections, the price is much more volatile on the side of Altcoins. For now, despite the industry-wide red color, prices are holding up relatively well. The Evergrande affair could, however, shake up the global economic stability of the planet, so be careful.
Ethereum hit a historic All Time High in May 2021, with a price tag of $ 4,388.
It has since undergone a 60% correction which brought it down to $ 1,709. The 200 Moving Average played its supporting role.
The resistance since May is therefore at 1700 dollars. A price close to several times during the period May – July 2021.
July 21, 2021 marks the start of a new bullish wave for the entire market. Ethereum was no exception and the ETH token regained 134% of its value to establish resistance at around $ 4,000 ($ 4,014 to be exact).
The price has since corrected. It returned to land on the 50 moving average for a few days.
And today, with the fall of the whole market, he has broken that support.
The violent drop of the day, currently 8%, has just pushed down the MM50.
This is a 27% drop from the previous resistance at $ 4000 to the current price at $ 3000.
The next short-term target for the price of this asset is the 200 moving average. The latter is still bullish and should cross the price towards the $ 2,750.