Ethereum is the second-biggest project in the crypto industry. It is responsible for the vast majority of DApps and DeFi protocols that exist in the space. But can Ethereum reach $10,000?
And if so, how high can ETH go?
The short answer is YES, Ethereum can reach $10,000 easily in the next few months or year. And it could go as high as $38,400. But there are some tick boxes that need to be checked before the cryptocurrency’s value can hit this level.
In this article, we are going to explore the Ethereum project and its market drivers so we can have a close estimate of ETH’s future valuation. Note that the approach here is data-driven and not based on sentiment.
If you don’t want to read a long article, you can skip ahead to the ‘Conclusion’ part but I highly recommend against it. You as a crypto person should not blindly believe everything others say. It’s in your best interest to determine how I got to this answer so you could think for yourself.
About Price Predictions
Before we move forward, I need to warn you not to make an investment decision based on someone else’s prediction. The truth is no one could ever predict Ethereum’s future price with certainty. Otherwise, we’d all be trillionaires.
What I can say is this prediction has been made after careful consideration of the data that is available at present. And there are a handful of bullish signs that suggest that Ether could skyrocket in the next year or two or longer. Months? Maybe, but not too high.
Understanding Ethereum’s Inflation Rate
Unlike Bitcoin that has a maximum supply of 21,000,000, Ether has a yearly inflation encoded in the protocol since its inception. There are roughly 111.72 million ETH in circulation as of July 2020, with an annual inflation of 18,000,000 in perpetuity.
Some might argue that this could be a slight hindrance for ETH’s market price to rise. But we must understand that Ethereum is not like Bitcoin. It’s not created to be a store of value.
It is a smart contract protocol and it should function as such. Besides, Bitcoin’s mining also functions like a pseudo-inflation mechanism. Yes, it has capped supply but it would take more than a century to have mined all the Bitcoins.
Ethereum, on the other hand, has a decreasing inflation rate. Today, 18,000,000 ETH might be a lot. But as time goes by and the circulating supply increases, its value would become relatively smaller.
How Ethereum Could Reach $10,000
There are several reasons why crypto assets blow up. But to get to $10,000, Ether would need to have a 2017-like rally. Only this time, Ethereum should lead the pack, not Bitcoin.
I don’t intend to undermine Bitcoin. It just so happens that Ethereum has more ground-breaking upgrades to arrive in the near future. Therefore, it has a serious chance of leading the next bull run.
So what are the factors that could contribute to ETH blowing up?
- More developer activity
The funny thing is that in the short-term both scalability and adoption in Ethereum are having a peculiar chicken and egg situation. Both are necessary but it’s a little tricky to determine which of which needs to comes first. I’d say both.
The Ethereum network experienced its first major scalability issue when blockchain game CryptoKitties became popular. A lot of people were collecting virtual cats on the internet that it slowed down the world’s biggest decentralized computer.
For what it’s worth, CryptoKitties was one of the earliest real applications of blockchain tech for recreation.
But the scalability problem remains. Today, Ethereum’s average transaction throughput is merely 15 tps.
Layer 2 solutions like Plasma and Optimistic Rollups have been created to scale Ethereum to about 1,000-3000 transactions per second (tps). And they are already here. The DApps just need to have second-layer versions to be able to support Ethereum off-chain.
As Vitalik says, “refinement and deployment”. Perhaps adoption too.
Matic Network is one of the most promising of them all. And it has already integrated with several DApps.
Ethereum 2.0 and Sharding
Second-layer solutions are cool but what everyone is really waiting for is Ethereum 2.0. That’s because it would enable the network to scale to 100,000 tps.
ETH 2.0, which is the network’s largest upgrade, would bring tons of new features and functionalities. The Beacon Chain, which is the proof of stake blockchain, is the first one to be deployed. It is expected to come sometime in 2020.
The second phase (Phase 2) is when the Shard Chains launch its test run. Therefore, it won’t be an immediate scaling solution. It would take several months to a year after release for the Ethereum network to finally be able to handle thousands of tps.
This is likely to come sometime in 2022 or later.
The Ethereum blockchain needs to be used by a large number of individuals in a meaningful way before it can surge to the thousands. Back in the 2017 bull run, Ethereum was used to produce thousands of new shitcoins.
It wasn’t that great, but it was heavily utilized. That’s the reason why Ether pumped so hard in those days. So if we want it to happen again, we need not more projects, but better projects to launch on Ethereum.
Today, several DeFi apps are already making breakthroughs in lending, DEXs, yield farming, etc. And these platforms have attracted a total of over 240,000 users as of July 2020.
However, DeFi platforms also need to integrate with second-layer solutions as soon as possible. Some of them already are, but we need more of them. The sooner the better.
Projects like Plasma, Matic, as well as layer 2 technologies like Optimistic Rollups and ZK Rollups are offering immediate solutions to the scaling problem.
DApps need to integrate with these technologies rather than wait for Sharding to be implemented.
More Developer Activity
Some might think this is too much to ask. After all, Ethereum already accounts for the majority of dev activity in the blockchain space. Yet we can’t deny that Ethereum is a large complex ecosystem that requires tons and tons of work.
We need all the help we can get. Unfortunately, the project’s smart contract language being used is Solidity, which is very new and frankly unheard of outside of crypto.
Fortunately, we can anticipate the implementation of eWASM, Ethereum’s new virtual machine, which supports a ton of programming languages. This would introduce Ethereum to a broader class of developers globally.
eWASM is estimated to be released sometime in 2022-2023.
When Would Ethereum Reach $10,000?
Now that we have established that Ethereum can reach $10,000, let’s determine when this is likely to happen.
Ethereum could reach $10,000 as early as 2021.
Why? Well, it’s the year that will likely have another crypto bull run, which is a year after the Bitcoin halving. That’s how it has always happened since the first halving.
Things could turn out differently this time around so take this with a grain of salt.
But assuming that a bull run is set to occur in mid-2021, it would coincide with (hopefully) the integration of second-layer Ethereum solutions by major Dapps, and perhaps exchanges.
By then, these Ethereum-based applications would have an exponentially higher capacity than what they have today. So the equation goes:
layer 2 integration + DeFi success + bull run + user adoption = $10,000 ETH
Why do I think this is likely to occur?
Looking at the historical data, ETH went from around $8 to roughly $1,300 in 2017. That’s a 16,000% increase.
And if we calculate ETH’s price today, which is $240, it only needs to increase by 4,049.38% to hit $10,000. That’s four times less than what happened in 2017.
If we were to assume that ETH would have the same rate of increase in the next bull run as it did in 2017, it should reach as high as $38,400. Although, this is quite possible, I wouldn’t bet on it. There are many variables at play that haven’t been considered in this scenario.
If you don’t want to be disappointed, I suggest you stick to the $10,000 prediction. But even that is uncertain. For instance, what if there won’t be a bull run this time for another 2-3 years?
What if, although this is unlikely, one of Ethereum’s competitors scales faster, better, and more securely in a year’s time? To the Ethereum purists, I sincerely advice that you do not underestimate Cardano.
Plus, we have this COVID situation, among other uncertainties.
If for whatever reason Ethereum does not reach $10,000 in 2021, then it should once shard chains are fully operational. Remember it won’t happen immediately after the release of Phase 1. But more likely, it should be ready for mass scaling by the time eWASM is deployed, which is likely to occur between 2022-2023.
It could happen longer, if there are delays. For instance, if Phase 2 is implemented only in 2024, then it’s possible that ETH’s price would hit where we want it to hit by then.
And if Ethereum scaling to 100,000 tps can’t drive the price to $10,000, then nothing will.
Ethereum can easily reach $10,000 because it has a lot of room to grow. Furthermore, it has proven to have the ability to surge in value to an unprecedented level as it has done in 2017.
Ethereum has a lot of proven use cases in the fintech sector. It has the highest developer activity among all crypto projects. Furthermore, thousands of other projects are built on it.
With all the brilliant developers working on it, it is extremely unlikely to fail. There are many competitors trying to take its place. Some of them claim to have superior technology. But none of them has proven anything in a meaningful way as of now.
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