What Is Impacting Ethereum Price Prediction Today and Tomorrow
4 December 2020
From January to November 2020, Ethereum has gained over 337% against the US dollar. In this article, we'll provide a snapshot of how varying macro and micro forces are impacting the Ethereum price prediction today and tomorrow for both retail and institutional investors.
The Impact of ETH 2.0 on Ethereum Price Prediction Today and Tomorrow
Ethereum started the year with low volatility of 64.7, which is the lowest recorded throughout the year. In the first half of the year, we can observe that Ethereum's volatility was primarily driven by the events surrounding the coronavirus pandemic. Note that the highest volatility – 269.9 – recorded in the first half was on March 13, at the onset of the pandemic.
[caption id="attachment_9002" align="alignnone" width="1200"] Via: TradingView[/caption]
In the second half of 2020, the maximum volatility recorded is 373.4, while the minimum is 72.3.
[caption id="attachment_9003" align="alignnone" width="1200"] Via: TradingView[/caption]
Note that the volatility is higher in the second half of 2020 as the price of Ethereum rallies to yearly highs of $623.47 on November 24.
Here are our reasons behind the recent rally of the Ethereum.
The anticipation of the Ethereum 2.0 Release
The main feature of the Ethereum 2.0 is the notable shift from the proof-of-work (PoW) to proof-of-stake (PoS).
With this upscaling of Ethereum, scheduled for December 2020, the demand for Ethereum increased as the number of ETH addresses reached 100 million for the first time since it began operations five years ago.
[caption id="attachment_9167" align="alignnone" width="2180"] Source: Etherscan[/caption]
In Ethereum 2.0, users will be required to put a stake of 32 ETH to act as validators. These will be the news miners of ETH who will serve to support the network and processing activity, which will save on electricity wastage as was in the PoW model. However, the "stakers" are required for online 24/7.
According to the US Futures Trading Commission, the adoption of the Proof-of-Stake model could change the classification of ETH from commodity to security. It means that US regulators, including the SEC, will acknowledge ETH as security. Furthermore, the CFTC chairman has voiced the optimism of regulators about DeFi.
The CFTC's optimism primarily comes from the fact that they understand the burgeoning field decentralized finance will not dissipate into oblivion. While the novel products introduced through DeFi pose a challenge, he believed that by bringing it under the fold of rigorous scrutiny by financial regulators will ensure transparency and no price manipulation.
This mainstream acceptance, coupled with the ever-increasing decentralised finance; ETH is bound to receive increased demand, especially from institutional investors. Furthermore, on July 22, 2020, the Office of the Comptroller of the Currency (OCC) directed that national banks' and federal savings associations' authority to provide cryptocurrency custody services.
2020 has seen increased geopolitical events that have resulted in inerratic fluctuations in fiat currencies. These events include the uncertainty surrounding Brexit and trade wars between the EU, US and China.
Consequently, this has impact Ethereum future price prediction as most investors are switching to cryptocurrencies not just for speculative purposes, but as a store of value. Note that apart from Bitcoin, Ethereum is the only other cryptocurrency with a licensed exchange in the US. This makes it one of the most widely accepted cryptos globally.
Let's take an example of EUR/ETH and EUR/USD. In 2020 year-to-date, the USD has weakened about 6.7% against the EUR; while ETH has strengthened about 306% against the EUR. From this perspective, it would have been better using the ETH both for speculative purposes and as a store of value would have been better.
[caption id="attachment_9005" align="alignnone" width="1200"] Via: TradingView[/caption]
2020 US & UK Stock Markets Impacting Latest Ethereum Price Prediction
[caption id="attachment_9006" align="alignnone" width="1200"] Via: Trading View[/caption]
Note that during the first quarter of 2020, both the US and the UK stock markets vastly outperformed the ETH. However, into the second quarter, returns from ETH were significantly higher, which means that in times of crisis, investors and speculators shun mainstream finance. While historical performance does not dictate future performance, many speculators are holding onto this information to structure their latest Ethereum price prediction as we move into 2021.
Ethereum Price Prediction This Week
The first phase of the ETH 2.0 is scheduled to go live on December 1, 2020, will require at least 524288 ETH. As of November 26, 2020, the ETH 2.0 deposit contract had secured more than 700000 ETH which ensures that the launch on December 1, will go as scheduled.
The massive demand to get ETH 2.0 is expected to increase the general Ethereum price prediction this week from most analysts. For example, Weiss Ratings expects that the valuation of ETH will appreciate by at least 18% once the activation of the Ethereum 2.0 is underway. At this rate, we expect ETH to continue its rally against the US dollar. It's inevitable that these forces will impact the Ethereum price prediction today and tomorrow in most analyst reports for the foreseeable future.