The second-largest cryptocurrency in the world by market capitalization, Ethereum, has had significant ups and downs. It went through a corrective phase and fell below $2,000 in the middle of 2022 after hitting an all-time high of around $4,800 in December 2021. For the first time in more than two years, ether’s price has risen to $4,000. This occurs amid persistent rumors that exchange-traded funds for spot ether would be authorized in the U.S.
The market capitalization of the second-largest cryptocurrency climbed by 4% the previous day, 15% last week, and 68% last month.
A Brief History of Ethereum’s Climb to $4,000
March 2024 marked a significant milestone for Ethereum. Buoyed by optimism surrounding the successful Shapella upgrade in April 2023, the price steadily rose, surpassing the $4,000 mark for the first time since late 2021. This surge was attributed to several factors, including:
- The Shapella Upgrade: This update made Ethereum’s switch to a Proof-of-Stake consensus method possible, improving scalability and lowering energy usage.
- The Dencun Upgrade: A further factor driving the increase was anticipation for the Dencun upgrade, which is expected to occur in March 2024. Enhancing layer-2 solutions’ scalability could reduce transaction costs and draw in additional consumers, as Dencun promised.
- Institutional Interest: Another factor was increasing investment in the Bitcoin space. The possibility that the U.S. Securities and Exchange Commission (SEC) might approve a spot Bitcoin ETF raised expectations that Ethereum ETFs would also be approved, increasing demand.
A Temporary Setback and Enduring Potential
While Ethereum did breach the $4,000 mark in March 2024, it has since experienced a correction, currently trading around $3,162.
- Profit-taking: After a significant price increase, some investors may have chosen to sell their holdings to lock in profits.
- Geopolitical Uncertainty: Global events, such as the ongoing conflict in Ukraine, can create market uncertainty and impact investor sentiment.
Despite the recent pullback, analysts remain cautiously optimistic about Ethereum’s long-term prospects. Here are some reasons why Ethereum could revisit the $4,000 mark beyond:
- The Dencun Upgrade’s Impact: We have yet to experience the full impact of the Dencun improvement. If it effectively lowers transaction costs and enhances scalability, demand for ETH may increase, which would draw more developers and users to the Ethereum ecosystem.
- Ethereum’s Utility: Ethereum’s role as the backbone for Decentralized Finance (DeFi) and Non-Fungible tokens (NFTs) remains strong. Continued growth in these sectors could translate into increased demand for ETH.
- Institutional Adoption: As regulatory frameworks evolve and institutional investors become more comfortable with cryptocurrencies, Ethereum could see a significant influx of capital.
- Spot ETF Approval: Ethereum’s price might rise significantly if a spot ETF is approved since it would open up a brand-new, easily accessible investment option for average investors.
Estimated May 2024 Ethereum Price
As May 2024 approaches, the price of Ethereum is expected to undergo a subtle swing, most likely due to the fallout from a halving event, falling between $3000 and $3100. A slight change may suggest future corrections following significant market occurrences during this time.
The Ethereum price is likely to remain in this range, demonstrating stability in the face of potential volatility caused by internal and external market sentiment. Anticipations regarding a post-halving effect could prompt moments of reassessment, providing information on Ethereum’s flexibility in adjusting its value proposition across changing market conditions.
Also read: Is XRP Ready for a Drop to $0.3 Ahead of the Bitcoin Halving?
