Ethereum price analysis

The Ethereum chart is moving constantly

As opposed to the stock markets, which close during weekends, you can trade in cryptocurrency 24 hours per day, 365 days a year. On the one hand, this provides for a lot of excitement, because the market is in constant flux. However, this may also cause much stress. The value of your portfolio will rarely be stable. This is something that takes some getting used to for new investors.

Where does the ethereum price derive it's value from?

The pricing of Ethereum is the product of a game of supply and demand that's played at the many exchange platforms dealing in Ethereum. Did Ethereum's exchange rate increase today? Then demand outstripped supply and vice versa. That's about it. The underlying logic is not very exciting. And unfortunately, predicting the factors determining the price remains quite challenging. To provide you with a bit more insight into the Ethereum exchange rate, we will take a closer look at the subject material. Why does Ethereum carry value? Why would people want to invest in Ethereum?

What do proponents say about the value of Ethereum?

Bitcoin was first envisioned as an independent form of electronic money: the money of the people. It aimed to bring about the democratisation of our monetary system. It was an attempt at shifting power from governments and financial institutions back to ordinary people. Ethereum continues this trend, but it is more focused on the platform economy than Bitcoin. Ethereum enables independent applications to execute scripts with a pre-established ruleset. This means that these rules are clear for everyone and are not prone to change. Its goal is to counter the ever-increasing power of major trading platforms and to return that power to the people. Although this technology currently does not exist yet, the decentralisation of applications like Uber or Airbnb is of great interest to many. It appears to be a matter of time before the first major decentralised applications will hit the market, helping the world become a bit more honest and transparent.

The Political Aspect

The democratisation of the internet is perhaps the most valuable component of Ethereum's potential. How cool would it be if these organisations become decentralised and autonomous, with a decision-making process based on the interests of token holders? There are plenty of exciting applications and business models that can be conceived in this way. Previously, this would have been unimaginable. 

Efficiency and eliminating the intermediary

It may sound counter-intuitive, but when you invest in a specific stock (Apple, for instance), your transaction will first pass three intermediaries on average. As you can imagine, this entails much additional cost. Blockchain technology excels in its ability to transfer tokens from one individual to another directly. There is no longer a need for an intermediary. Also, the blockchain reliably records its entire transaction history, i.e., the stock's ownership chain. Shares issued on a blockchain would hypothetically enable faster and cheaper transfer of ownership than regular stocks would. The Ethereum blockchain has much potential in this regard. It should come as no surprise that major consultancies like Ernst & Young have come out on record with projects running on Ethereum.

The value of a platform like Ethereum is challenging to assess. Nevertheless, it remains fascinating to discuss what the exact cost of ether should amount to. We have provided you with a brief overview of this discussion here, but you can find much more information about this subject online. Do you want to buy ethereum or sell ethereum? Feel free to contact our live support for more information.

What do opponents of Ethereum argue?

As opposed to Bitcoin, Ethereum is not primarily a payment method; it is a platform that can be utilised by decentralised applications. The ‘ether’ currency serves as the fuel that is used to pay miners to keep applications running and allow for the processing of transactions. The success of Ethereum is utterly dependent on the success of decentralised applications and the development of the platform. 

Platform scalability and the limited amount of decentralised application users (dApps)

Scalability is currently Ethereum's most significant obstacle. The platform is nowadays only able to handle 15 transactions per second. To be able to run critical financial applications on a global scale, its processing capacity will need to increase. It has also not yet been firmly established that decentralised applications are of real added value. The platform's limited user base suggests that no ‘killer applications’ have been conceived so far. Then again, this could also be caused by the relatively low transactions per second limit. It is a ‘chicken and the egg’ situation.

Greater fool theory

Opponents also like to argue that the value of Ethereum is not based on any rational grounds. This line of thinking also appears in critical reflections on Bitcoin. Irrational investor expectations are often driving cryptocurrency pricing. The theory suggests that many invest in Ethereum with the hope that at a later stage, they will be able to charge more money for it (sell it to a 'greater fool’). These investors are not in it for the platform's potential. And indeed, for many investors, the possibility of a quick profit must have been enticing. But that does not mean that the platform is devoid of any value.

The Price History of Ethereum

Ethereum has only existed since 2015. Compared to Bitcoin, its history is far less extensive. Still, Ethereum is considered a real veteran of the crypto market, and for many of us, it feels like it has been around for much longer. It's odd how one month in the crypto industry feels like a year in real life; there is always so much happening. We have listed a couple of highlights for you here, to allow you to have a better look at the Ethereum price history so far. This overview suggests that the development of Ethereum is still at a very early stage.

July 22, 2014 - Ethereum commences with its crowd sale

It's not been that long since Ethereum, or its ICO, was first introduced and offered as a crowdfunding initiative. When the platform was still in its crowdfunding stage, it was possible to obtain a single ether for $0.31. In hindsight, this was an incredibly lucrative deal.

May 12, 2016 - Market value rises to 1 billion dollar

Within two years following the introduction of the platform, its value had skyrocketed to a total of more than 1 billion dollars. Back then, one ether was worth about $10. Those who made their initial investment in those days have already witnessed a 3200% increase.

June 17, 2016 - the DAO hack occurs

The DAO hack probably marks the most controversial moment in Ethereum's history. Due to an inherent weakness in the smart contract (which contains the DAO rules), users were able to steal about 55 million dollar worth of ether from the decentralised enterprise. Ethereum's rate took a major blow following this hack. In the aftermath of the hack, rivalling factions pressed for a much-discussed hard fork. Eventually, Ethereum Classic emerged from this dynamic.

2017/2018 - The advance to record highs

At the beginning of 2017, it was still possible to obtain Ethereum for as little as $8. This would soon change. In May of the same year, Ethereum reached the $100-mark, but it wouldn't end there. The Ethereum craze continued throughout the year. It only came to a standstill in January 2018, when it hit its $1432 peak. Soon after, the crypto winter occurred, and Ethereum's pricing dropped back down to $84. These days, ethers appear to become more valuable again; its price is currently evaluated at about $200.

Ethereum has seen significant upward momentum in the preceding period. The upcoming launch of Ethereum 2.0 (with its transition to a hybrid form of Proof-of-Work and Proof-of-Stake) also bodes well for Ethereum's near future. We hope that this information has been of value to you and that it helps you make a well-informed decision on whether or not to invest in Ethereum. Always keep in mind that you should do your comprehensive research as well, and do not let yourself be carried away by emotions. All under control? There are cryptocurrencies which experienced bigger price swings than Ethereum. Check out our Bitcoin price, Ripple price, Litecoin price and the Bitcoin Cash price pages for more information.