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      • Secure Digital Markets Inc (SDM) is a leading global digital asset trading, marketing making, and treasury management firm with an MSB license that provides boutique financial services to small medium and large capital management groups, payments and forex corporations and other financial institutions, governments and individuals. SDM was founded in 2017, is headquartered in Toronto and New York City with partners and representatives in financial centers around the world.

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ethereum price analysis

Ethereum Price Analysis

  • Ethereum saw a decline of 4.6% in its price on the morning of 16th July 2020. This sudden drop was caused after the Twitter hack of many high-profile people. 
  • The number of active ETH addresses is growing at twice the rate of growth observed in the number of active BTC addresses in 2020.
  • The price of Ethereum is up by 90% in July 2020 when compared to that in January 2020. 

On the morning of 16th July, Ethereum saw a drastic sell-off that led to a 4.6% decrease in the price of Ethereum. As per our Ethereum price analysis, there was a sudden drop in the positive sentiment for Ethereum following the news about the Twitter hack which reverberated across the crypto industry on the 15th of July. 

Ethereum Price Analysis – After Twitter Hack

The Twitter accounts of some of the leading figures of the political and entertainment landscape were hacked, and the thieves wrote tweets requesting followers of the hacked Twitter accounts to send Bitcoin to their wallet, after which they’d reward them with even more Bitcoin. 

The losses caused by the recent Twitter hack is estimated to be around $120,000. This incident, once again associated cryptocurrencies with scams, could be considered a step back for the crypto world. Potential newcomers will be put off from entering the crypto trading market because of this widely covered hack. 

This recent drop caused Ethereum to lose its growth momentum. In the process, Ethereum also lost its daily 12-EMA and the 26-EMA because of the price drop caused by the news about the Twitter Hack. However, it didn’t prove to be a big blow to ETH as its current price hovers just below $240 at the time of writing. 

Increasing Demand for Alternative Finance

There has been an increase in interest towards cryptocurrencies this year – fueled by the high demand for alternative finance and the drastic measures taken by the central banks around the world in the face of the COVID crisis. 

Ethereum’s price, unlike Bitcoin’s, has grown by almost double this year. The number of active Ethereum addresses is increasing at twice the rate of Bitcoin’s number of active addresses so far in 2020.

In January 2020, each of the Ethereum tokens was up for trading at $130. Ethereum is currently being traded at around $240, which is 90% more than what Ethereum was being traded for in January this year. 

Impact of Delayed ETH 2.0 on the Price of Ethereum 

ethereum price analysis

The ETH 2.0 upgrade has been long-awaited by ETH fans and many ETH holders have been waiting for it for some time now. Justin Drake, a researcher at the Ethereum Foundation, wrote in an AMA post on Reddit that ETH 2.0 isn’t ready yet. He believes that it will likely launch in January 2021 and not before that. 

Vitalik Buterin, the co-founder of Ethereum, disagrees with Drake and has argued that ETH 2.0 could be out by November 2020.

So what exactly is ETH 2.0? It is the better and upgraded version of the Ethereum blockchain. 

ETH 2.0 will transform the Ethereum blockchain network from a proof-of-work system to a proof-of-stake system. In ETH 2.0, the consumers will receive rewards for locking up their ETH. The Ethereum development team has been working on ETH 2.0 for the last few years now. 

Ethereum sellers are trying to break a symmetrical triangle with ETH currently being traded for around $240. With a further delay of 3-6 months for implementation of ETH 2.0, the short term traders have got a pretty large window of trading time, and thus, it is impacting the price of Ethereum now. 

A period of 3-6 months is not much for the long term believers in Ethereum as they believe in holding it for long, rather than selling it for any short-term gains. On the other hand, the news about a delay in the release of ETH 2.0 is a high-level of bad news for the short-term traders. 

Where is Ethereum Heading?

#1. Increase in Transaction Volume may Lead to Price Gains

During our Ethereum price analysis, it became clear that a consistent increase in the use of Ethereum has been occurring for the last several weeks. There were more than 1.08 million transactions on Sunday. We may very well soon breach the record of almost 1.35 million daily transactions that Ethereum saw in January 2018, if ETH continues the growth momentum in terms of usage. 

The increase in the number of transactions hasn’t impacted the price of ETH so far. We have so far seen that an increase in the trading volume attracts new investors. It hasn’t been the case with Ethereum yet, but this rise may have a positive impact on the price of Ethereum soon. 

#2. DeFi Boom

The Decentralized Finance market is growing tremendously and has achieved an all-time high in terms of value locked – currently amounting to over $1.5 billion. In 2020, the DeFi market has grown at 124%. In comparison, the cryptocurrency markets have managed to grow at 42% in terms of total market capitalization. 

At one point in the past, Ethereum was soaring high, and its growth was such that it almost overshadowed a market cap of $100 billion. This astounding growth of Ethereum was mostly because of the increasing number of ICOs from 2016 to 2018 as many of these were raising funds in ETH. 

The DeFi industry will empower ETH to gain its lost prominence again, and such claims are not without any substance. Experts like Joseph Todaro, partner at Blockchain Capital, have claimed that DeFi will likely help ETH gain a market cap of $1 trillion in the future. A market cap of $1 trillion means that each ETH will reach a price of $9000. 

Joseph is not alone in his belief about the high impact of DeFi on the prices of Ethereum, as many expect great things from DeFi, which in turn will benefit Ethereum. 

Conclusion 

Our Ethereum price analysis says that there are many issues that ETH will have to face in the short term, and its price will likely remain within the range of $250 because of it. However, we see ETH growing in the future after the launch of ETH 2.0. 

Ethereum’s growth will be further aided by many exciting DeFi projects, which are seeing an uptick in terms of adoption as well as transactions on their platform. 

This is the second in a series of price analyses that Secure Digital Markets is releasing to keep our readers up-to-date on what’s happening in the markets.

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