Ethereum (ETH) is the second largest cryptocurrency in the market with its size of market capitalization following Bitcoin. Price of any cryptocurrency, including ETH, is quite a challenging task since the crypto market is very volatile in nature and there are a bunch of factors on which ETH price depends in the long term.
However, there have been several major events this year, which allow assuming that by the end of the year, Ethereum price may soar and give traders a chance to collect healthy profits.
Recent ETH Performance, 2021 ATH
Over the past few years, Ethereum has seen many substantial price fluctuations. Three years ago, in 2021, ETH reached a historic peak of roughly $4,800 with the help of Bitcoin which also hit an all-time high of $69,000. Still, since then high market volatility has led Ethereum to a decline of almost 50%. Throughout 2022 and the start of 2023, ETH sailed up and down between $1,000 and $2,000 price marks after collapsing from the $4,800 peak.
In the second half of 2023, ETH got more stable and began to gradually recover thanks to various developments both in the cryptocurrency industry and global economy. Besides, certain developments have happened particularly in direct connection with Ethereum.
Key Factors to Impact ETH Price in 2024
There are several major factors that are likely to fuel the growth of Ethereum price this year. However, strong market volatility should be taken into account anyway while looking at them.
The first one is the approval of spot Ethereum exchange-traded funds (ETFs) by the American Securities and Exchange Commission (SEC). The regulator granted permission to trade on July 23, allowing such financial behemoths as BlackRock, VanEck, Bitwise, Ark Invest, etc, to launch their ETFs on the market.
Unlike futures ETFs, these funds are linked to Ethereum spot price and their issuers actually hold the underlying asset – Ethereum. These funds purchase available ETH from the market, thus increasing the demand for this cryptocurrency. Spot ETFs allow all kinds of investors to gain exposure to Ethereum via shares traded on stock exchanges. This way investors will be spared having to purchase the crypto directly, take care of custody, private keys, security and other things important in this case.
So far capital inflows in those ETH ETFs are not too large and one of the funds, Grayscale’s ETH, continues to face massive withdrawals. But potentially this is an important factor for driving the ETH price up in the long run. On August 6, spot Ethereum ETFs saw a net inflow of $22.2 million.
The second crucial factor seen by ETH this year is the implementation of the Dencun upgrade. This happened in mid-March and it finally allowed the developer teams of Ethereum to start utilizing the Proto-Danksharding feature. It significantly improves Ethereum’s scalability and its throughput, meaning more transactions per second at a higher speed with lack of congestion. Dencun has brought Ethereum one step closer to the Ethereum 2.0 iteration. As part of this transition, Ethereum has left behind the proof-of-work consensus algorithm, switching completely to proof-of-stake.
However, the implementation of Dencun did not bolster the Ethereum price the way it was anticipated. Nor has so far the launch of spot ETFs given ETH any price boost.
Other factors include the continuous growth of decentralized finance (DeFi) protocols and dapps built on them, the growing popularity of non-fungible tokens (NFTs) for which Ethereum is the primary platform to launch on.
Ethereum 2024 Price Prospects
As the week started, Ethereum was in for a staggering 24% plunge, following the 18% crash of Bitcoin. The crypto market began to fall on Friday, following traditional markets in the US and around the world. That was caused by the collapse of the Japanese stock market after the recent quantitative easing. Ethereum plunged from $3,160 on Friday and hit $2,220 on Monday.
By now, Ethereum has seen a little rebound and is trading slightly above the $2,500 level. Still, many traders and institutional investors are buying the ETH dip. Among them is the founder of the Tron blockchain Justin Sun, according to various on-chain data sources. Still, there are many whales who are selling Ethereum, unloading tonnes of it onto the market. Aside from that, Ethereum is seeing increasing competition from such platforms as Cardano, Solana and others.
Considering all the volatility that has been surrounding the cryptocurrency market recently and overall geopolitical and macroeconomic factors, ETH price may follow various scenarios from here on. Bitcoin price growth is a key factor for ETH growth. Taking into account the fact that the Fed Reserve does not plan to loosen the interest rate this year, Bitcoin is unlikely to experience any explosive growth. Some experts even expect a further correction. Therefore, since Ethereum is largely pinned to the Bitcoin price, it is possible that a bearish scenario will play out for ETH. In this case it will remain within the $2,000 – $3,500 range.
In case a bullish scenario works out, Ethereum may see a surge above $4,000 and go towards $4,500 by the end of 2024.
