Ethereum Price Prediction: Can Crypto's Bridesmaid Stake Its Claim? (2024)

Since its inception in 2015, Ethereum (ETH) has lived up to the famous investor adage of “high risk, high reward”, and its price has been marked by both appreciation and significant drawdowns.

“Ethereum has faced some tumultuous times,” Ethereum expert and founder of The Daily Gwei, Anthony Sassano, tells Forbes Advisor.

“We saw the price plunge over 70% in the second half of 2016 and then a devastating 94% drop in 2018. Then, there was another significant drop of 80% in the first half of 2022.”

However, Ethereum’s price history isn’t just about declines, and, as Sassano notes, Ethereum experienced a stratospheric increase of 2500% in the first half of 2016.

“Then, in 2017, it skyrocketed by a staggering 20,000%. And if we look from the bottom price of $US80 in 2018-20 to the top of $US4900 in 2021, it surged 5400%.”

These meteoric rises are usually reserved for micro-cap stocks or options in other markets. Yet, as the digital asset markets are still in their infancy, the small size of this emerging asset class compared to other traditional markets means these types of eye-watering gains can still be found, even among the largest players such as Ethereum.

Significantly, Ethereum’s performance against Bitcoin (BTC), the largest and most well-known cryptocurrency, during the latest downturn was considerably stronger than in the past.

“It went down 90% from peak to trough last time, but now, it’s only down 40%,” Sassano notes. This trend highlights a shift in market perceptions of Ethereum, as Bitcoin is no longer seen as the only blue-chip asset in the crypto space and Ethereum increasingly is viewed as another “flight-to-safety” asset.

“It seems Ethereum is no longer viewed simply as a risk-on, tech play,” Sassano says.

“Ethereum isn’t just a tech story anymore. It’s seen as money and a store of value.”

While it is impossible to accurately predict the performance of any digital asset due to the variety of factors that can affect the price, there are certain events that investors can watch out for that could impact Ethereum’s price.

Sassano, for one, thinks there may be significant price gains in 2024.

“I think 2024 is going to be a great year…as there are plenty of tailwinds headed Ether’s way, such as the birth of staking via EigenLayer, two major network upgrades—Dencun in March and Petra sometime in Q4—as well as spot ETH ETFs going live as early as May,” Sassano says.

Sassano also sees the strengthening of the ‘layer-2 ecosystem’, a technical term for solutions designed to help scale the Ethereum network, allowing for faster transactions and lower user transaction fees. Arbitrum and Optimism are currently the most prominent players in the layer 2 space, however, many others are being developed.

“These secondary layer solutions will continue to grow stronger and gain wider use,” Sassano says.

Lastly, existing projects within the Ethereum ecosystem are expected to progress and mature.

“[These projects] will continue to build out their products and launch new versions of them,” Sassano says.

The global macroeconomic outlook also naturally plays a role. Over the past two years, the post-pandemic world has grappled with high inflation levels and increasing interest rates from central banks. This put a damper on risk assets, such as equities and crypto, as investors found safe returns in other markets, such as bonds.

However, following positive inflation data, the US Federal Reserve has indicated that rate cuts could be on the cards in 2024, which may lead to increased capital inflows to crypto.

The Bull Case

Sassano believes there are a number of scenarios that could fuel an increase in Ethereum’s price in the future, one of which is a new development known as “restaking”, in which users stake the same tokens on the central blockchain and other protocols, thereby securing multiple networks at the same time.

“Restaking unlocks a brand new primitive for Ethereum and extends ETH’s strong market cap and liquidity profile to secure services,” Sassano says.

Investor excitement surrounding restaking has been high, with many new restaking protocols emerging over the past few months and billions worth of Ethereum deposited by investors. “EigenLayer, the current top restaking protocol, has already gathered more than $6 billion worth of staked ETH tokens,” Sassano says.

Just like the spot BTC ETF applications created a positive narrative for Bitcoin, driving Bitcoin’s price upwards into the approval date, Sassano believes the same situation could play out for Ethereum.

“With the approval of spot BTC ETFs in January and the change in attitude from the SEC towards Ethereum over the last six months, there is good reason to believe that the SEC will approve spot ETH ETFs for trading sometime in 2024,” he says.

The earliest date of approval is expected to be May 23, but it could happen any time this year.

There are also a host of significant network upgrades scheduled for 2024, which could positively impact Ethereum’s price. For example, Sassano points to Dencun, the long-awaited Ethereum network upgrade, going live sometime in March which will bring with it a host of improvements, not least of which will be cheaper transaction fees. This is especially significant because a large amount of transaction activity has shifted from Ethereum onto Ethereum-based Layer-2 networks over the past 12 months. These Layer-2 networks, which are essentially blockchains that exist on top of Ethereum, leverage Ethereum’s decentralisation and security while offering faster and cheaper transactions for users. The Dencun upgrade will make these networks even more economical, dropping transaction fees to a few cents or potentially lower in some cases.

With the approval of spot BTC ETFs in January and the change in attitude from the SEC towards Ethereum over the last six months, there is good reason to believe that the SEC will approve spot ETH ETFs for trading sometime in 2024

Petra, another Ethereum upgrade slated to go live by the end of this year, is still in development, but as Sassano notes, “it looks like the main improvement will be the hardening of Ethereum’s censorship-resistance properties”. This improvement ensures that all users have equal access to the network’s services, safeguarding the platform’s decentralised and open format for digital transactions and applications.

Finally, Ethereum’s fee-burning mechanism, introduced in The Merge upgrade, continues to operate, reducing the overall supply of Ethereum. “This steady burning of Ethereum continues, further supporting a potential rise in value,” Sassano adds.

The Bear Case

Although Sassano is optimistic about Ethereum’s potential, he acknowledges the possibility of downturns. He argues, however, that a bearish scenario for Ethereum seems explicitly less likely given the positive catalysts on the horizon. Instead, a bear case would likely be tied to broader market conditions or increased regulatory scrutiny.

“I don’t think there’s really a bear case for Ethereum or ETH right now, given all the positive catalysts to come,” Sassano says. “The bear case for all of crypto would be more about a shock in the macro environment or a worsening of the regulatory pressure we’ve already seen on crypto.”

In the long term, Sassano identifies potential factors that could suppress Ethereum’s growth. “If we think about a bear case for Ethereum over the next five to 10 years, it would be Ethereum failing to continue growing; its product-market fit turning out to be just a niche; and being hampered by regulation, particularly at the ports of entry,” he says. This could involve stricter regulation of fiat currency engagement with Ethereum, or even harsh stablecoin regulation more broadly.

However, Sassano emphasises that this scenario seems relatively unlikely. “I obviously give this a very low chance of happening,” he adds. Even though it’s essential to consider all possibilities in the unpredictable world of cryptocurrencies, the current landscape suggests a more positive outlook for Ethereum.

Sassano is optimistic about the investment potential of Ethereum, based on potential price appreciation of ETH as well as the inherent earning potential within the Ethereum network.

“I continue to believe that ETH is the best risk-adjusted investment across any asset class for the long-term,” Sassano says.

His bullish stance is predicated on the numerous positive developments within the Ethereum ecosystem, the potential catalysts for future growth, and Ethereum’s performance amid broader market conditions.

Moreover, Sassano draws attention to the benefits of staking ETH. “Not only are there many reasons to be bullish on ETH itself, but people can also stake their ETH and earn an ETH-denominated Annual Percentage Rate (APR), currently around 3-4%,” he explains.

Through staking, ETH holders can actively participate in the network’s operation and earn rewards, providing an additional income stream on top of potential capital gains from ETH’s price appreciation.

Ethereum’s earning potential is also relevant to the pending spot ETH ETF applications. Investors are known to love yield-bearing assets, which means the launch of a spot ETH ETF that provides yield on top of price rises could draw attention from a significant number of investors.

However, it’s important to keep in mind that this is the best-case scenario, and cryptocurrencies are inherently volatile. Naturally, whether Ethereum, or cryptocurrencies more broadly, are a good investment for you, will depend on your financial situation, risk tolerance and goals.

This article is not an endorsem*nt of any particular cryptocurrency, broker or exchange nor does it constitute a recommendation of cryptocurrency or CFDs as an investment class. Cryptocurrency is unregulated in Australia and your capital is at risk. Trading in contracts for difference (CFDs) is riskier than conventional share trading, not suitable for the majority of investors, and includes the potential for partial or total loss of capital. You should always consider whether you can afford to lose your money before deciding to trade in CFDs or cryptocurrency, and seek advice from an authorised financial advisor.

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