Ethereum is the most popular altcoin. However, it’s more than just another cryptocurrency. Experts predict that it could increase in value up to 400% by 2022.
Since its creation, Ethereum’s native token Ether (ETH) has seen a tremendous increase in value. Vitalik Buterin (computer programmer) launched Ether in 2015. Since then, its price has risen from $0.311 at its launch in 2015 to $4,800 at its peak late last year. There’s been a lot of volatility.
Even though Ether’s price fell below $2,800 on Friday, it still offers a lifetime return of investment (ROI), of more than 700,000% as of the writing. Ethereum’s unique feature, unlike Bitcoin or other cryptocurrency, is its utility as an open-source software network, which allows developers to create and power new tools, apps and NFTs.
Blockchain-based software networks have many uses across the tech industry, including music, gaming, and decentralized financing (DeFi). This makes it one of the most widely-used cryptos in the past year.
Ether’s annualized ROI is almost 300%. This means that early investors have almost quadrupled their investments every year since 2014. Although crypto prices can be volatile, financial experts advise that you only invest what your finances will allow you to lose. This is in addition to foundational goals such as emergency savings and paying off high-interest debt.
How high do experts predict Ether’s value to rise? Here are some factors that contribute to the volatile but rising Ethereum price graph projections and what experts expect for the year.
Predictions for the Ethereum price
Three experts were asked how high they saw Ethereum this year. Each expert qualified their predictions by saying that it was almost impossible to predict the future price. Other experts believe that ETH’s price could be more volatile than Bitcoin over the next few months. This is because Ethereum is transitioning to a more energy-efficient version of its technology that insiders affectionately refer to as “Ethereum 2.” Experts are still waiting to see how companies and investors who have built their tech on Ethereum’s platform react to these changes.
These factors are what we can expect from Ethereum’s price in the coming year.
Pro Tip
According to financial planners, crypto should be only 1% to 5% in your overall portfolio. Despite its popularity, crypto is highly volatile and prices can change rapidly overnight.
$4,000-$5,000
Despite the difficulty of predicting the price volatility of cryptocurrencies, experts that we spoke to agreed that ETH could break the $4,000 mark in 2022. A Bloomberg intelligence analyst Mike McGlone predicts that Ethereum will end the year at $4,000 to $4,500.
But what about the future? It will be affected by many factors, more on which below.
$6,500-$8,000
Coinpedia, a crypto news outlet, predicted that ETH would end 2022 at $6,500 to $7,500 if there was a continuation of the bullish upswing which began in mid-2021. The bearish downturn that occurred in 2022 made it clear that Ethereum’s value is not dependent on sentiment. While the Ethereum team transitions to its second generation updates, there is a lot of competition for the blockchain from other platforms.
Henri Arslanian (global crypto leader at PwC), said that “Ethereum was only show in town” in a January 12 episode on CoinDesk’s First Mover. Investors will have to see increased demand and better functionality in order for Ether to continue to rise in price.
NextAdvisor was told by Ian Balina (investor and founder of Token Metrics crypto research and media company), “I believe Ethereum could go to $8,000.” “Ethereum is clearly the leader, but other blockchains are boarding new users faster due to Ethereum’s high transaction speeds and high gas fees.”
$12,000+
Coinpedia projects a higher price of $12.962.33 for Ethereum 2.0 in 2022. As Ethereum’s service fees are high, the new upgrades could make it more affordable to users to create and mint products.
What Factors Influence Ethereum’s Prices
Ethereum is known for being the first blockchain to implement smart contracts. These are coded instructions that run financial transactions using algorithms.
New Ethereum alternatives that offer similar capabilities are now on the market, and they are changing the demand for ETH in both positive and negative ways. These are some variables that can impact Ethereum’s value.
High Traffic and Use
Artists and creators were able to create and mint non-fungible tokens, or NFTs, using smart contracts. This was both a blessing as well as a curse for Ethereum. The blockchain’s popularity caused what some called a “bottleneck”. Imagine the Black Friday parking lot at a mall — but digitally.
With so many people using Ethereum, it has become more expensive to transact there. Although the Ethereum team has made significant improvements to its infrastructure over the years, it took a while to perfect the technology.
In the meantime, many new companies have developed add-on solutions (known collectively as “Layer 2s”) which work on the existing Ethereum blockchain. New blockchain networks (known as Layer 1s) have been also released and promoted as possible Ethereum alternatives. This can drive traffic away from Ethereum blockchain and add new competition to any product’s market share.
Investors will find that more people use Ethereum to increase support for their investment. However, competitors could pull users away from Ethereum, which could impact Ethereum’s value in the future.
First Mover Advantage
Despite the new competition, experts often suggest Ethereum’s “first mover advantage” has positioned it for long-term success, even though newer and more environmentally-friendly technologies have been developed. Because cryptocurrencies are valuable only because of community buy-in, it is important that users commit to the project.
Fortunately, Ethereum has both. John Zannos, a partner in Inflection VC (an early-stage venture company investing in the open market and blockchain companies), says that “I believe the first mover advantage” is real. “But I think what is more important to me are the health and size of the community and how many developers are joining that community. Because that’s what will drive innovation.
Cardano and Solana are new blockchains that offer similar functionality to Ethereum. They also have their own native cryptocurrency. Experts still believe that Ethereum has the potential to grow with its users, and keep up with changing demand in the future.
Raza Khan, a fintech investor and founder of Be, says that Ethereum could quickly expand its capacity. For now, the Ethereum community seems to be okay with waiting and seeing if it does.
Competition from ‘Ethereum Killers’
Web3 could be a household term if “cryptocurrency”, “NFT”, and “cryptocurrency” became household terms by 2021. Web3 is an open-access internet version built on blockchain technology. It allows financial transactions to be more transparent and individuals can take more control over their data. Users also have most of the infrastructure through cryptocurrency.
Companies such as Ethereum and other blockchains like Cardano and Tezos work to build the infrastructure that will enable the future vision for Web3. These developments are similar to what investors see as the dot-com boom that brought Google, Facebook, and Apple into public consciousness.
Balina says that “2022 will see the battle for Web 3” and the next evolution in the internet.
The Future of Ethereum
Despite Ethereum’s volatility and competition, there is a general optimism that the original smart-contract blockchain will survive this period of trials.
Arslanian stated that Ethereum holds over 90% of NFT market. “This year is going to be very important for Ethereum. It will be a make or break year.”
Zannos told NextAdvisor that there is good reason for Ethereum to rebound quickly from the current slump. Zannos states that Ethereum’s strength is its community spirit. This allows for people with a lot of intelligence to innovate and create new opportunities. “At its core, my optimism rests on the flexibility of Ethereum’s capabilities.”
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