Although Ethereum is not mooning anymore, its price is still slowly rising. In fact, multiple experts still give it a “Buy/Strong Buy” signal, indicating that they have a bullish outlook on the coin. There is a big chance that what we’re experiencing right now is the calm before the storm – and ETH price will shoot for the moon in the near future.
So, why has Ethereum price been going up these past few months? When and why do crypto prices go up, actually?
Well, the second question has a very short and simple answer: when the demand for a coin outweighs its supply. That’s the basic law of economics, after all. If there are more people who believe an asset’s price will rise then there are those who think it will fall, then there are more buyers on the market, which pushes the price up.
Of course, in reality, it’s not quite as simple, especially not in a market as volatile as crypto. However, you don’t need to understand all the intricacies of crypto pricing in order to be able to make a profit or understand why a certain coin is going up.
Understanding market sentiment plays a big role in predicting future price movements. In this article, we will take a look at the potential factors you can look out for when analyzing crypto prices using the example of Ethereum and its recent price spike. Let’s dive in!
Ethereum Price History
Let’s take a look at Ethereum’s recent (the last 3 months) price history first.
As we can see, Ethereum price has initially started rising in late July-early August. Then, it plateaued for a bit in late August, and had a big spike in price at the beginning of September. Currently, Ethereum is hovering around the $3,300 mark.
The Crypto Market
Even if you haven’t been following crypto for a long time, you’ve still probably already noticed that, barring some exceptional cases, the cryptocurrency market usually moves as one. Sure, the exact amount by which the price of each digital asset changes may vary, but the direction of the change (up or down) and even the curve of the price chart is often the same.
That happens because although there are a lot of different cryptocurrencies out there, for many people, crypto/the crypto market is a singular entity, one big combined asset.
As a result, it’s not very sustainable in the long run to only keep up with the news on a singular cryptocurrency you chose to invest in. Instead, you have to keep an eye on the whole crypto industry.
For example, we can see that ETH price began its climb upwards at the beginning of August. That coincides with the date that Google has changed its policy regarding crypto ads: from August 3rd onwards, crypto exchanges, wallets, and other cryptocurrency services could once again advertise themselves.
Tech Update – London
The Ethereum blockchain received its long-awaited London hard fork upgrade at the beginning of August. This caused quite a stir in the industry – one of the biggest changes it has brought was altering the way transaction fees are calculated on the Ethereum network, making them a lot less volatile.
As volatility is one of the biggest arguments that people and regulators use against crypto, any change that reduces it is very welcome.
As a result of the London hard fork upgrade, the supply of Ether has slowly begun to dwindle as the update has introduced coin burning to the blockchain. And on the 3rd of September, the number of ETH coins burned has finally managed to exceed the number of Ethers created.
Such a dynamic could be very beneficial in the long run, and if it weren’t for the correction that came soon after, it’s possible we could’ve seen ETH price rise even further in the first week of September.
If a cryptocurrency is scheduled for a major, well-advertised, and anticipated tech update in the near future, then it is very likely that its price will increase soon. Additionally, if that update solves one of the longest-standing problems of that asset, then the hype will be even bigger, leading to a bigger price spike.
State regulation news and updates play a big role in building hype and increasing prices of all cryptocurrencies. Likewise, unfavourable regulations often cause prices to fall.
For example, Ethereum’s price decrease in early September this year can be at least in part attributed to the news of SEC starting to look into DeFi platforms like Uniswap. As such platforms are most often based on Ethereum, the coin has naturally taken a hit.
Although cryptocurrencies and the crypto industry pride themselves on being decentralized, they still depend a lot on government regulation. When governments decide to crack down on mining (like the Chinese government did recently), or when they make it harder to make crypto transactions via complicating the process of accessing exchanges, many cryptocurrencies immediately see a decrease in their prices.
Can Ethereum Overtake Bitcoin?
First, let’s clarify something: when we talk about Ethereum’s potential to overtake Bitcoin, we mean by market cap, not by price. Market capitalization has always been a much more accurate representation of an asset’s power.
Some experts are predicting that Ethereum price has a chance to hit 100K USD as a result of all the updates it has already implemented and is planning to install in the future, like Ethereum 2.0, which will lead to the switch from the proof-of-work consensus mechanism to the proof-of-stake one. However, there are a lot more sceptics than there are optimists – 100K still seems unreachable for ETH, at least for now.
Ethereum’s price will need to double and Bitcoin’s stay the same for the former to overtake BTC by market cap. While we don’t think that $7,000 is out of the question for Ethereum, we believe that if it does rise to that mark, then Bitcoin will also rise, too. Ethereum’s meteoric price increase will attract more attention to crypto in general, and Bitcoin, as the most popular cryptocurrency, benefits from extra hype the most.
However, if we consider the impact and usability of both of these coins, then we could say that in some ways Ethereum has already overtaken Bitcoin. Of course, its name doesn’t hold the same weight, and it is not as well-known – but Ethereum was the backbone of many innovative breakthroughs in the crypto industry, such as smart contracts, DeFi, dApps, NFTs, and more.
Since Ethereum (ETH) is the second most popular cryptocurrency on the market, one can buy it on any reliable cryptocurrency exchange. However, the crypto market is highly volatile, and the price can change within hours. Instant crypto exchange Changelly allows you to catch the moment and purchase ETH with a credit card (Visa, Mastercard), bank transfer and even Apple Pay.
So, why did Ethereum price rise? What was the biggest factor that contributed to its recent growth?
Well, there’s no one factor that is single-handedly responsible for Ethereum’s success in the past few months. Of course, the biggest credit should probably be given to the coin’s team, who consistently plans and pushes out important updates. Additionally, the general hype surrounding crypto has also played a role, as well as the resurgence of popularity of NFTs.
All that said, sometimes it may not be wise to rush to buy Ethereum the moment there is favorable news coming up – after all, the rest of the market sees the same news you do and can make the same conclusions. For example, one would think that after the news of Bitcoin’s adoption as a legal tender by El Salvador the coin’s price would’ve risen astronomically, but instead it (and many other cryptocurrencies, including ETH) fell due to delays in trading.
So, keep your hand on the pulse of the market, do your own research, and don’t rush when it comes to investment. Ethereum seems to be in a really good position right now, and may even retake its previous All-Time High in the near future.
Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.