Price Preview December 28 - January 3
ETH closes out 2020 with a 2-year high as ETH futures draw near
Ethereum is closing out 2020 in emphatic style with a sharp rally above $730 following an equally impressive run by Bitcoin last week. These price levels for Ethereum have not been seen since a fleeting moment in May 2018, which ended with the collapse of a massive speculative bubble.
However, this time around there’s a lot more to be optimistic for. Unlike the rise and fall of ETH in 2017/18, the multi-month climb of 2020 has been grounded in fundamentals, institutional adoption and the long-term investment thesis of an increasing number of billionaires. While retail interest has certainly ticked up in recent months, it is nowhere near the levels experienced when ETH was last at $730.
Google Search Trends for “Ethereum”
This begs the question - what then for 2021?
One of the most notable events happening next year is the launch of ETH futures on February 8th by the world’s largest financial derivatives exchange, CME Group. The launch will make ETH speculation more accessible for institutions and investors while also adding enormous legitimacy to the Ethereum blockchain.
To draw parallels, CME Group announced their plans to introduce Bitcoin futures in November 2017 with the contracts launching a month later and amidst a price rally that took BTC to all time highs.
2021 may also begin to show some of the lagging effects of the Federal Reserve’s astounding level of money printing. With the dollar having suffered heavily in the global markets as well as negative and zero percent interest rates, investors will likely continue to look to cryptocurrencies as a hedge with potential for significant upside.
While Bitcoin continues to reap the rewards of a simple and easy-to-digest narrative of “digital gold”, Ethereum’s (more complex) booming digital economy and double-digit interest rates will see a massive increase in adoption, leading to the continued but more pronounced outperformance of ETH over BTC.
At a lower level, Ethereum can expect EIP-1559 to roll out as well as continued deposits in the Eth2 deposit contract along with reduced issuance (eventually falling below Bitcoin’s). Combine this with the increasing role of ETH as collateral in Decentralized Finance and the bull case for Ethereum simply does not cease.
Outside of another black swan event or regulatory crackdown, ETH would appear set on achieving new highs next year.
In this preview we look at:
Regulatory issues take center stage as SEC files a lawsuit against XRP
Stablecoin volume passes $1 trillion (83.4% of that on Ethereum)
ETH/BTC bounces dramatically in lead up to ETH Futures
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