When Ethereum’s popularity increased, making it the second most prevalent digital asset after Bitcoin, its price rose to $1400 from its previous $10. The price rose throughout 2018 and currently trades at an all-time high of $2985. However, being quite volatile, Ethereum features drastic and rapid fluctuations that can be intimidating yet exciting. Similar to stocks, the price of Ethereum is influenced by the token’s supply and demand, among other factors. Moreover, Ethereum doesn’t feature a formal balance sheet, profits, or revenues. As a result, it can be quite difficult to predict the exact future price of the digital coin.
While Ethereum price prediction can be challenging, history indicates that the cryptocurrency has prospects to grow. Similarly, the demand for Ether continues to rise as new decentralized finance programs are built based on the Ethereum network. Moreover, some experts perceive Ethereum to be the internet’s economic bandwidth. Cryptos are relatively new assets in the market compared to other investments such as Indices, Stocks, and Forex. Thus, besides extreme volatility at times, they are also quite mysterious.
Moreover, since they do not operate like the typical fiat currencies, economists are yet to discern all the nuances involved in Ethereum, among other digital coins. As long as this is the case, we should be content relying on informed guesses based on existing trends and data. This post focuses on various aspects that influence the price of Ethereum;
Government Regulations
Cryptocurrencies grew in popularity due to the absence of limitations and regulations typical to fiat currencies such as the Dollar and Euro. However, various countries, including China and Nigeria, maintained a huge stand against digital currencies. Such regulations have negative impacts on cryptocurrencies, including Ethereum. When a major economic power threatens with regulations, Ethereum prices are likely to drop since most cryptocurrency transactions are cross-border.
On the other hand, if a country openly embraces cryptocurrencies, it can positively impact ETH prices. Typically, crypto companies prefer operating in countries with favorable conditions.
Potential
Most people trading Ethereum mainly consider its future Ethereum. FinTech companies also leverage the wide variety of applications offered by Ethereum. Ethereum allows companies to incorporate blockchain, automation, and smart contracts into their daily operation. Ethereum is expected to continue growing in the coming years with such demand.
Crypto-exchange platforms
Numerous platforms facilitate crypto trading, with each exchange offering different rates. As a result, the price of Ether may vary from one platform to another. Similarly, new exchange platforms are likely to suffer from security breaches which may disrupt the flow of Ethereum. When investors and customers are worried about their crypto trading platform, they will likely change their investing and spending habits. As a result, it is recommended to use reliable trading platforms such as PrimeXBT, which offer predictable and reliable trading environments.
Adoption
When more people and major companies adopt Ethereum as a means of payment, prices are likely to go high. Similarly, when there is a low influx of users, the price of Ethereum will be affected negatively. A large influx of new users helps stabilize the market by making it less volatile and more attractive to investors.
Competition
Competition in the crypto market influences the price of Ethereum to a greater extent. Similarly, since the price of Bitcoin impacts the entire crypto market, Ethereum is likely to follow a bullish trend portrayed by Bitcoin. Also, when a new cryptocurrency that shares a similar utility with Ethereum emerges, it is likely to influence Ethereum’s price.
Moreover, competition from other digital currencies may disrupt the supply and demand of Ethereum, resulting in a loss of value.
Conclusion
Like any other investment, trading Ethereum involves risking your capital in hopes of a reward. Apparently, due to their high volatile nature, cryptocurrencies are risky assets compared to most other traditional investments. Typically, the risk of trading a digital currency is inversely proportional to its market capitalization. Fortunately, being the 2nd most valuable cryptocurrency by market cap, Ethereum offers less risk compared to other smaller cryptos.
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