“Ethereum for $ 10 thousand? Is quite real". Why altcoin has risen in price again

The price of the largest altcoin in terms of capitalization exceeded $ 3.5 thousand for the first time since mid-May. What factors triggered the growth of the cryptocurrency and when will its value renew its …

The price of the largest altcoin in terms of capitalization exceeded $ 3.5 thousand for the first time since mid-May. What factors triggered the growth of the cryptocurrency and when will its value renew its historical maximum

On the morning of September 1, the price of Ethereum for the first time in the last 3.5 months exceeded $ 3.5 thousand. In August, the altcoin rose in price by 42%, and its capitalization increased to $ 416 billion, according to CoinGecko. Topplabs.org experts named the reasons why the price of Ethereum began to grow rapidly and gave a forecast for the price of altcoin in the future.

What happened to altcoin in August

On August 5, the London update was released on the Ethereum network, which completely changed the mechanism for calculating transaction fees. Part of the commissions that miners previously received as rewards are now burned.

Since the activation of the update, more than 158 thousand Ethereum worth $ 557.4 million have been burned in the cryptocurrency network, according to the ultrasound.money service. The average burning rate per minute is 4.06 ETH ($ 14.1 thousand).

On August 27, it became known that a critical error occurred in the network of the largest altcoin in terms of capitalization. The Ethereum developers have released a bug fixing update that prevented major blockchain forking.

Growth factors

Ethereum today is a more popular coin among large investors than bitcoin, says Mikhail Karkhalev, financial analyst at Currency.com crypto exchange. In his opinion, there are several reasons for this:

  • The boom in NFT, DeFi and GameFi is driving the demand for ETH as the bulk of projects are launched on the Ethereum blockchain;
  • Ethereum acts as a hedge asset for investors who invest in tokens of various projects;
  • The trading volumes for Ethereum are less than for Bitcoin, respectively – the volatility is higher, the risk is higher, and therefore the opportunity to earn is also higher;
  • The crypto market as a whole is growing. Bitcoin traditionally "drags" other coins along with it;
  • The development of the project, successful hard forks, a gradual transition to the PoS algorithm also form a positive attitude of investors towards the coin.

Big potential

The rapid growth of Ethereum is due to optimism among market participants regarding the further development of the project, says Nikita Soshnikov, director of the Alfacash cryptocurrency exchange service. The altcoin price has not yet returned to its historical maximum, which was observed in May of this year ($ 4.3 thousand). Because of this, the potential of the cryptocurrency has not yet been exhausted and the coin remains underestimated, he said.

The Ethereum rate is also growing against the background of a general decline in investor interest in bitcoin, which could not gain a foothold above $ 50 thousand and continues to "stamp" below this mark, Soshnikov noted.

“Tired of the lack of any clear upward movement in Bitcoin, investors turned their attention to Ethereum,” the expert added.

Bitcoin rose 34% in August, while Ethereum gained 42%. At the same time, the share of the main cryptocurrency on the market decreased by almost 5%. Altcoin, on the other hand, managed to increase its share in the digital asset market by more than 1%.

Ethereum went on the offensive

The range of $ 3.3-3.4 thousand, in which Ethereum was in August, was the last key zone of resistance, says Karkhalev. After overcoming this zone, the altcoin actually went on the offensive to renew the historical maximum. At this stage, further movements will depend only on the market sentiment, Karkhalev said. According to him, if the market continues to grow, then at the end of September Ethereum will be close to updating its all-time high.

“I doubt that we will see new highs in September. I think that both Bitcoin and Ethereum will set price records in November-December, ”the expert predicted.

Long term movement

By the end of the year, Ethereum has every chance of reaching the $ 5,000 mark, Soshnikov said. In his opinion, the further growth of altcoin will largely depend on the success of the deployment of the Ethereum 2.0 update in 2022. With a successful update, the altcoin rate may exceed $ 8,000 next year, the director of the Alfacash cryptocurrency exchange service predicted.

“The long-term forecast for Ethereum at the level of $ 10 thousand seems to me quite realistic. I would even say that this is not an optimistic, but a moderate scenario, "Soshnikov added.

Ethereum has already established itself as a reliable blockchain ecosystem with all the functionality necessary for DeFi, the expert noted. Since DeFi will obviously grow against the background of the demand for financial decentralized products among a wide range of users, then Ethereum will also grow, Soshnikov predicts.

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