Despite low volatility, Ethereum
(ETH) has been performing well over the past few weeks, but the cryptocurrency
could go even higher in the long run. Because of this, believers and traders
are ramping up as they reckon that the second most valuable coin is in the
early phase of a super rally. At spot rates, the coin is changing hands at
$155, down 10.1 percent in the last week after retracing from $190 Q1 highs and
$170 resistance level.
“I’m finally warming up to the idea of an ETH long again. Not sure if it’s caused by the chart or the fever I’m currently dealing with. Will report back when I decide to pull or not pull the trigger.”
Before adding that:
“I legit only have to think about longing ETH and it goes up. This shit is like magic. And no I haven’t longed yet, and yes you’re all gonna burn in hell for front running me.”
While ETH continues to experience a
random pattern of trading since the start of the year, it’s price is up
year-to-date, bouncing off $70 and up 11.81 percent in the last month. Because
of supportive technical factors, shifting sentiment and general optimistic
leads from traders/analysts, several investors are channeling their hard-earned
funds into ETH with conviction that the coin would print higher by close of the
There are several reasons why
cryptocurrency enthusiasts are optimistic about Ethereum’s future. In the first
instance, the Ethereum developers approved the EIP 1234 to reduce it to reduce
block rewards to just 2 ETH per block in what has been called thirding. This
development would help ETH have a better value alignment with BTC and reduce
the inflation rate.
So far, the Ethereum network has been
achieving this. Eric Conner, a developer, says that Ethereum
inflation is on the decline and it could drop even lower by the end of the
year. He tweeted that by the end of 2018, the Ethereum network was targeting an
inflation rate of 4.7 percent. Once the Ethereum network adopts the Proof of
Stake Protocol, then the inflation rate would even drop below 2 percent and
continue to decline towards 0.5 percent.
Ethereum Is an Excellent Store of Value
While Bitcoin (BTC) is seen as a
great store of value, Ethereum (ETH) is also making a claim for that position.
The Constantinople upgrade was already implemented but not entirely. Once it is
complete, the Ethereum network would become scalable and overcome the slow
transaction speed plaguing it.
There are predictions that the supply
of ETH will decrease while its demand would increase. Once that happens, the
price of ETH will naturally inch higher as the law of supply-demand kicks in. Add
that to a projected increase in demand for ETH due to more use of gas, higher
investment due to speculation, and more usage of DeFi apps, the path of least
resistance has been defined.
Ethereum’s claim for a store of value
will get a boost for more usage as gas fees, staking, and storage fees. As the
inflation rate goes down to roughly 0 percent over the next two years, the
supply of ETH will decrease.
Furthermore, in Serenity and once proof-of-stake
is implemented allowing staking, it would limit the number of ETH in
circulation. Because of this, an ardent ETH believer James Spediacci says, ETH
will have the six characteristics of money which are; durability, portability,
acceptability, divisibility, uniformity, and limited supply. These six
characteristics imply that people would consider ETH as a store of value, a
unit of account, and a medium of exchange.
The EIP 1234 implementation, the
Constantinople upgrade, and the potential switch to PoS would all play a role
in making ETH a good store of value. Therefore, it’s not hard to see that the
timing, combination of development and technical factors would naturally lift
prices of ETH higher in the long run. We could, and odds are we are already
there, in the early phase of a ETH leg up Ether leg up that investors have been
longing for sometimes now.