Analysis

Ethereum price predictions for the rest of 2020

It is easily the second-best known cryptocurrency and many prefer it to big-brother Bitcoin. But as we move towards the end of the year, what is the Ethereum price prediction?

Playing number-two in the business world presents a number of challenges and some never quite master them. We can all think of also-rans who left the field: in the UK, these included British Caledonian Airways (taken over by larger rival British Airways), Mercury Communications (which never seriously troubled British Telecom) and camera-maker Ilford (no match for Kodak, although it still makes film).

But then there are the successes. Pepsico makes a decent living despite the greater size of Coca-Cola, and for years Avis scrapped profitably on the car-hire scene with market leader Hertz.

You would have to say that Ethereum plays that part in the cryptocurrency world, that of the challenger that has successfully built its own following. In a moment, we’ll look at what marks out those who manage to live comfortably in second place from those who do not. But first, if we are to make an Ethereum price prediction, it makes sense to look at where that price has been recently.

Ethereum price predictions for the rest of 2020

Bitcoin and Ethereum are not real rivals

At the time of writing, each Ethereum unit is trading at $359.45. One month ago, on  September 9, the price was $350.68, and three months ago, on August 14, it was considerably higher at $433.27.

That said, the momentum appears to be upwards.

What can the performance of its competitor, Bitcoin, tell us that will help in making Ethereum price predictions for the rest of the year?

At the time of writing, it is trading at $11,064.10. One month ago, on September 9, it traded at $10,216.40, and three months ago, on August 14, it changed hands at $11,859.20.

A very similar pattern, in other words – up on the month but down on the August price. This suggests that the factors affecting the rise and fall of the two cryptocurrencies are broadly similar.

What factors affect the price?

An obvious starting point is the status of their rivals in the world of “real” currencies. We met Coca-Cola and Pepsi a moment ago and it is not widely recognised that their supposedly bitter rivalry has always been a bit of a charade. 

Both purveyors of sweet fizzy drinks are, in truth, on much the same side. Their real competitors are not each other but tea, coffee and other beverages. Similarly, the true challenge to Bitcoin and Ethereum comes from the dollar, the euro and gold, competitor safe-haven assets.

Fraud and regulation can shake confidence

Whenever the dollar, in particular, looks problematic for whatever reason – inflation, domestic political instability, central-bank money printing – then the big cryptocurrencies will benefit, especially if the price of gold is relatively high, thus shutting out some traders and investors.

This may well explain the strong performances in August, when gold went through $2,000 an ounce, and the more subdued showing since then, albeit with an upward trend during the past month.

A second is the reputation in general of cryptocurrencies as an asset class, or at least the large ones – there are perhaps thousands of varieties of cyber-money, but only a dozen or so really matter. Talk of regulatory crackdowns or allegations of fraudulent behaviour concerning the “initial coin offerings” that launch cryptocurrencies can only deter traders and investors, as can reports of hacker attacks.

Third is the relative attraction not only of major currencies and gold, but of a much wider range of alternative assets, from fine wines and paintings to property, company credits and distressed debt. Those seeking to diversify their portfolios may decide such assets are less “correlated” with conventional securities (such as shares) than cryptocurrencies are.

These, then, are the factors that major cyber-money denominations share. But in trying to make a reliable Ethereum price forecast, we need also to examine what it is that makes a successful, as opposed to unsuccessful, second-place brand.

If in doubt, ask Einstein

One factor is surely that it has important points of difference with the first-placed business. Any Ethereum price analysis has to consider what marks out the cryptocurrency. After all, were the number-two to be a replica of the number-one, why would anyone choose the former rather than the latter?

A key difference between the two is that Bitcoin’s origins are shrouded in mystery, while those of Ethereum are not. The former was supposedly founded by Satoshi Nakamoto, someone variously rumoured to be Japanese, to be Japanese-American and to be non-existent.

Ethereum’s initial founder was Vitalik Buterin, a Russian-born Canadian about whose existence there have never been any doubts. He was shortly joined by others, all of whose names are publicly available.

Given that cryptocurrency promoters are, in effect, asking potential investors and traders to exchange “real” money for a digital equivalent, Ethereum’s lack of mystery as opposed to Bitcoin may be a continuing attraction for many.

A second, less tangible, factor is the creation of a devoted customer base. Think of Apple in its rivalry with the PC as the prime example here.

Finally, no Ethereum price analysis would be complete without mention of the “miss” factor. Were a second-placed player to vanish overnight, would anybody miss it? It seems safe to say that, for now at least, the answer with regard to Ethereum is yes.

Will Ethereum’s price rise between now and the end of the year? It seems likely to do so, albeit modestly. It should certainly hold its value.

But he superstitious may find its name disconcerting. It comes from the word ”ether”, a substance that scientists once argued must exist out in space in order to explain the movement of light in relation to time.

Then Albert Einstein proved that the speed of light is constant, that time is relative and that “the ether” does not exist.

Source: https://capital.com

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button