Key points
After a solid 2023 performance, ethereum prices are back above the psychological $2,000 level and within striking distance of new 52-week highs.
The U.S. Securities and Exchange Commission has continued its crypto market crackdown throughout 2023, but some experts say the implementation of much-needed crypto regulations will open the door for more investors and money to flow into the crypto market.
While bitcoin still reigns supreme, ethereum has maintained its position as king of the altcoins. Together, bitcoin and ethereum now account for roughly two-thirds of the total global crypto market cap.
The biggest crypto market catalyst investors are anticipating in the coming months is the likely SEC approval of the first spot bitcoin exchange-traded fund to trade on a major U.S. exchange. Once the SEC approves the first spot bitcoin ETF, ethereum investors are hoping it wont be long before the first ethereum spot ETF gets the SECs stamp of approval as well.
The leading altcoin could also catch a bid in the first half of 2024 if the Federal Reserve begins cutting interest rates sooner or more aggressively than expected.
Ethereum prices are up more than 60% year to date as of late November, but they have significantly lagged bitcoins 128% gain.
Additional upside in 2024 will likely depend on monetary policy, additional clarity on the crypto regulation front and the ability of ethereum to demonstrate scalability as the number of decentralized applications, known as dApps, on ethereums programmable blockchain continues to grow.
Ethereum is approaching the close of 2023 near its 52-week highs, and much of that recent positive momentum stems from investors anticipating the SEC will soon approve its first spot cryptocurrency ETFs.
In recent years, the SEC has approved several popular cryptocurrency futures ETFs that hold futures contracts rather than cryptocurrency itself.
But the regulator has repeatedly rejected several rounds of applications for spot ETFs that would hold actual cryptocurrencies, such as bitcoin and ethereum. In its past rejections, the SEC cited concerns over investor safety and potential cryptocurrency market manipulation.
However, Grayscale scored a major legal victory over the SEC in August 2023 when a court overturned the SECs rejection of Grayscales application to convert its popular Grayscale Bitcoin Trust into a spot bitcoin ETF.
Grayscales victory is also good news for ethereum investors because the firm filed in October to convert its Grayscale Ethereum Trust into a spot ethereum ETF as well.
Grayscale isnt the only company seeking SEC approval for a spot ethereum ETF in the U.S. ARK Invest and 21Shares jointly applied for the Ark 21Shares Ethereum ETF in September 2023.
BlackRock followed up by applying for approval to convert the iShares Ethereum Trust into a spot ETF in November 2023. Both applications are still awaiting SEC approval. BlackRock previously applied for a spot bitcoin ETF in June.
Given bitcoins position as the gold standard in crypto, its likely the SEC will first rule on several of the spot bitcoin ETF applications before potentially approving the first spot ethereum ETF.
If the regulator approves a spot bitcoin ETF, it wouldnt necessarily guarantee that spot ethereum ETF approval is imminent. But it would certainly be a strong indication that it could be.
ETH investors are hoping the launch of spot crypto ETFs will provide easy access to crypto for a new class of institutional and retail investors, opening the floodgates to a wave of demand that could push crypto prices to new highs.
The SEC stamp of approval would also help reassure skeptical investors that ethereum and other cryptocurrencies are a valid, safe asset class.
In addition to a potential spot ethereum ETF, Jesper Johansen, CEO and founder of Northstake, said scalability will be the biggest topic on ethereum investors minds in 2024.
As user adoption of ethereum grows, the protocol will need to scale its operational capacity to facilitate more network transactions. Projects and integrations that increase the scalability of ethereums protocol will be one of the primary value drivers for ETH in 2024, he said.
The ethereum blockchain first went live in 2015 and spent most of its first few months trading for less than $2.
Ethereum didnt start generating significant price momentum until skyrocketing bitcoin prices gained cryptocurrency mainstream awareness for the first time in late 2017.
ETH prices hit $100 for the first time in May 2017 and continued their meteoric rise to break above $1,000 in January 2018 following the launch of the first bitcoin futures contracts in December 2017.
CME Groups bitcoin futures represented the first crypto-related financial products offered by a mainstream financial institution. CME didnt follow up with ethereum futures contracts until September 2022.
Ethereum prices ultimately peaked above $1,300 in January 2018 before plummeting to under $100 by December 2018. Later, crypto trading became trendy once again during the COVID-19 pandemic. The price of ethereum soared to new all-time highs and reached a peak of $4,891 in November 2021. That was before rising interest rates triggered a sell-off in cryptos and other risk assets in 2022.
The 2022 sell-off created chaos in the crypto market. Luna and its associated stablecoin terra completely collapsed in May 2022. That year, crypto exchange FTX and a handful of other prominent crypto firms and crypto lenders filed for bankruptcy protection.
Amid the crypto winter in 2022, ethereum prices dropped as low as the $1,000 threshold. But ETH made it back above $1,500 by January 2023 and briefly topped $2,000 in April 2023.
In the second half of 2023, investors shifted their focus from 2022s crypto winter to the possibility of the first SEC-approved spot crypto ETFs.
Ethereum investor sentiment is bullish and pricing momentum is positive heading into 2024
That said, longtime crypto investors know gains and losses can go as quickly as they come, and ethereum investors should anticipate more volatility in the year ahead.
Ethereum is notoriously volatile and unpredictable, along with the rest of the crypto market. However, momentum is positive for now, and there are several reasons for investors to believe ETH prices will continue to trend higher in 2024.
Unlike bitcoin, which is primarily used as a store of value and means of value transfer, the ethereum blockchain network has a unique utility for dApp developers. Developers use the ethereum network to develop other cryptocurrencies, trade non-fungible tokens, and create and run smart contracts and other decentralized finance applications.
Bitcoins overall crypto market dominance has been on the rise, but ethereums utility and decentralization have helped it continue to dominate the altcoins. As of October 2023, the ethereum ecosystem had more than 1,800 monthly active developers, three times more than polkadot, which is the second-largest platform for developers.
Ethereum is also the most popular blockchain for NFT sales. The ethereum network nearly doubles the NFT sales of the bitcoin blockchain (including wash sales) and has significantly more NFT sales than any other blockchain, according to CryptoSlam.
Ramani Ramachandran, co-founder and CEO of Router Protocol, said the financial media will likely focus on ethereums price swings in 2024, but long-term investors should instead focus on the platforms innovation and upgrades.
Im looking forward to what 2024 brings. Ethereum has regularly been at the front of smart contract innovation, making them one of the most interesting projects to watch, Ramachandran said.
Finally, ethereums transition away from proof-of-work verification makes the cryptocurrency potentially more scalable and appealing to investors and developers concerned about the environmental impact of cryptocurrency mining.
Besides its utility value, ethereum remains the only cryptocurrency other than bitcoin with futures contracts that trade on the Chicago Mercantile Exchange. Futures contracts are agreements to buy or sell an asset at a specific price at a future date, and they can provide a high degree of leverage that can supercharge investor returns.
Futures trading is particularly popular among institutional investors, and ethereum futures can serve as useful hedges against bitcoin positions.
Average retail investors can also trade ethereum futures contracts, but the inherent volatility of futures creates an additional dimension of risk on top of an already extremely volatile and risky cryptocurrency.
It can be very difficult for even professional financial analysts to determine a true value for ethereum because it doesnt generate cash flow or revenue like a traditional business, nor does it represent ownership of a physical asset or intellectual property.
But analysts at VanEck use estimates of total ethereum network revenue to make long-term price projections for the cryptocurrency. VanEck forecasts ethereum network revenue will climb from $2.6 billion today to roughly $51 billion by 2030.
But the firms bull case projection of $136.7 billion in 2030 revenue represents a best-case scenario ethereum price target of around $51,000.
According to VanEcks methodology, ethereum prices could surpass $50,000 by 2030 in a best-case scenario, but that would include a significant rise in activity on the ethereum blockchain over the next six years. When more apps are running on the blockchain, increased fee revenue is generated.
Kadan Stadelmann, chief technology officer at Komodo Platform, said this type of growth will hinge on the ethereum networks scalability.
If the ethereum network becomes more scalable, ETH could be a good investment alternative to bitcoin. However, reaching $50,000 during the next bull market cycle is possible but unlikely, Stadelmann said.
The ethereum blockchain has emerged as the top blockchain for dApp developers, positioning ethereum to potentially be a key player in the future of finance, NFTs and other industries. The more popular the ethereum network becomes, the more the long-term bull case for the cryptocurrency makes sense.
But there is no guarantee ethereum will maintain its position as the top dApp blockchain over the long term. Ethereum has been an excellent long-term investment up to this point, and it has more than doubled the return of bitcoin over the past three years. Unfortunately, ethereum prices have always been extremely volatile and prone to extreme sell-offs.
Ethereums all-time intraday high was $4,865 in November 2021.
Ethereum may be an appropriate investment for short-term market speculators and traders who have high risk tolerance and are looking for an extremely volatile asset.
But ethereum has an unproven long-term track record compared to assets such as gold, stocks or bonds, and long-term investors shouldnt assume ethereums strong past performance is a guarantee of future returns.
Its extremely difficult to accurately predict the price of cryptocurrency given fluctuations in the crypto market are based largely on investor sentiment. However, VanEck has forecast ethereum prices will reach around $11,800 by 2030 based on current network revenue trajectories.
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Ethereum price prediction 2024 - USA TODAY
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