Despite the economic downturn caused by inflation in 2022, the investment market continues to rise. If you put in $1,000, S&P500 (^GSPC -1.02%) Four years ago, the index fund's current assets would be $2,167.halved Bitcoin (BTC -5.30%) The May 2020 reward sparked a new cycle of price increases and easing, punctuated by the approval of exchange-traded funds (ETFs) that mirrored Bitcoin's spot price three months earlier. Therefore, $1,000 in Bitcoin increased to $10,690 in the same four years.
However, both Bitcoin and the stock market Ethereum (Ethereum -6.30%). He put $1,000 into a major smart contract currency in April 2020, and now he has $26,800 in his digital wallet. The cryptocurrency is currently worth $3,430 per coin, up from $1,800 a year ago and $133 in early April 2020.
However, past performance does not guarantee future results. Will Ethereum have any game-changing moves comparable to Bitcoin's upcoming 50% reduction in mining rewards? Could this digital asset continue to soar above the market in 2024 and beyond?
The answers to these two important questions are “yes” and “I'm not surprised.”
Read on to find out what Ethereum's developer community is up to next and what investors should expect from this crypto veteran in the near future.
From Bitcoin to Ethereum, ETFs expand your crypto horizon
First, the first 11 spot Bitcoin ETFs likely opened the floodgates to other types of crypto funds. Many of the investment firms that participated in the January approval round have already filed applications with the Securities and Exchange Commission (SEC), with the aim of introducing Ethereum-based ETFs as soon as possible.
However, some potential Ethereum ETF sponsors are in no hurry. For example, Bitwise Chief Investment Officer Matt Hogan recently said there was a 50% chance that the Ethereum ETF would be approved in May 2024, although he may actually want to delay it until December. do not have.
As you know, market makers and investors are still scratching their heads over the brand new Bitcoin ETF. Injecting another type of well-known crypto ETF into this active market could backfire.
“It's hard for professional investors to get people to pay attention to anything other than Bitcoin at this point,” Hogan said in an interview with Forbes over the weekend. “TradFi is still digesting Bitcoin and if you [traditional finance] As you become more familiar with Bitcoin and cryptocurrencies, you'll be better prepared for what's next. But even if we shoved it down their throats in May, I don't know if they would. ”
In other words, the company behind Bitcoin ETF per bit (BITB -6.28%) We expect Wall Street to be hungry for Ethereum ETFs once the Bitcoin frenzy subsides. Therefore, Bitwise filed for approval for an Ethereum ETF last Friday, waiting to see if the timing is right while doing some homework on the long-term outlook for Ethereum.
Therefore, the market trends we have seen recently with Bitcoin should be replicated with Ethereum at some point. The timing of approval can make a difference, at least initially. However, if the two major cryptocurrencies overcome the growing pains of this new investment route, the long-term effects should be the same. It will be a more robust asset class with broader access for investors who cannot or do not plan to buy cryptocurrencies directly. .
In particular, the expected influx of deep-pocketed institutional investors could be a game-changing tailwind for both Bitcoin and Ethereum. He doesn't know if these micro-dramas will happen in 2024, 2025, or later.
Ethereum technical adjustments
ETF approval is underway, but the timing and exact details are in the hands of slow-moving regulators. The Ethereum community has more control over another part of the cryptocurrency's price movement: technical improvements to the blockchain network's operating code.
One important upgrade went into effect on March 13th. The so-called Dencun update introduced sharded blob transactions that create easily processed bundles from unrelated Ethereum transactions. The big idea is to speed up processing and lower transaction fees while taking a series of small steps towards a more effective network.
These steps will continue into 2024, followed by more rapid technological changes.
Ethereum co-founder Vitalik Buterin outlined the next stage of development, called the “purge.” In a blog post last month, Buterin explained how cleaning out many outdated security features will provide even more space for transactional data in each Ethereum contract. As always, this process will be slow and steady, with the final cleanup scheduled for “a few years from now.”
Therefore, there will be major changes to the platform midway through the Ethereum operating platform. Some steps can be completed quickly, while others may take some time. The important point is that Ethereum is evolving to meet the requirements of a busier crypto market. The community is particularly interested in making smart contracts smarter, cheaper, and more secure in response to challenges from alternative smart contract coins, such as: avalanche and Solana.
Where can I find Ethereum's killer app?
And that brings us to a third class of potential catalysts. Ethereum does not need a faster, more sophisticated transaction system unless the demand for smart contracts increases. The combination of broader public awareness and upcoming technology improvements should further increase interest from app developers and create the first “killer apps” in simmering areas such as decentralized finance and his Web3 tools. is.
The exact timing of these improvements is unknown, but important Ethereum backers like Vitalik Buterin will do their best to move the Ethereum community forward. Build it and you'll have a killer app and a mass-market success story.
Will these catalysts push the price of Ethereum to $10,000 by the end of this year? Anything is possible, but I wouldn't place a time-limited bet on it. It's better to build a diversified portfolio of robust cryptocurrencies, stocks, and other asset types and allow the overall value of that collection to rise at your own pace. Investing is a marathon, not a sprint. It is also better for crypto investors to be patient than to throw value arrows at the calendar.
Therefore, I would say that Ethereum's value is poised to rise for years to come, and I expect the price to rise in 2024. However, I can't promise that you'll break the $10,000 barrier by the holiday season. Dear reader, patience is a digital virtue.
