Ethereum, the second-largest cryptocurrency by market cap has had one of the best runs these past months. Despite many Altcoins overthrowing the ones ahead of them, Ether bulls have held on to the second spot firmly for years. Interestingly, the asset is now primed to take on the only Cryptocurrency above it; Bitcoin. Many key players have suggested that Ether is strong enough to unseat Bitcoin.
Ether’s demand currently unmatched
Data from Bloomberg repeatedly solidified these claims, establishing that there is objectivity behind these claims. However, in order for Ether to live out this potential, a significant upsurge in the demand for the asset must be recorded time and time again, as Ether’s value is directly dependent on its blockchain benefits.
So far, demand has been significantly high. Ether products have been some of the hottest in the institutional market. It raked in the highest profit from late August, while Cardano stayed in second place. Data from CryptoQuant also revealed that BTC spot exchange reserves still haven’t made new lows (lower is more bullish), but ETH spot reserves are plummeting. Let’s not forget the demand for NFTs so far and how their demand continues to make Ethereum extremely attractive for newcomers in the crypto industry.
Can Ether close the year above $20,000?
With an unmatched demand at this time, market players are betting on Ether imitating Bitcoin’s 2017 move and flipping prices to a high of $20,000 by December. Bitcoin also imitated this move last year, when it surged significantly into the new year as the bull rally intensified.
Although fundamental pushbacks can hold ether back from attempting $20,000, institutional demand can single-handedly elevate Bitcoin’s price. While some will consider $20,000 far-fetched, Bitcoin is proof that institutional interest is strong enough to change the course of the market, as such a 3x from now till December is still well within factual data.
Furthermore, Ethereum recently saw its first deflationary day, which means that the amount of Ether burned by EIP-1559 exceeded the issuance to miners for that day, thereby making it nearly impossible for miners to dump on the market as supply reduces. As noted by some Ether observers, the event “will keep happening until eth 2.0 is released. Afterward, the fees will drop significantly and won’t have the same burning effect anymore. So in the end it will be only inflationary.”
Certainly, reduction in supply is bound to favor the network and the price of Ether in the long term. However, at present, Ether remains in the red zone. After surging 19% last week Ether bulls sent prices to $4,000 for a short period. Despite the downswing to $3,251 at this time, analysts are still calling $5,000 as near term price.