Presented below is the in-depth analysis of Ethereum price action and the detailed prediction of its value change over the stretch of 1 to 5 years.
Ethereum is a top-ranked mineable coin with the ticker ETH that has a present value of $1 590.77 and a market capitalization of $191 259 893 789.
Cryptocurrencies have long passed the point of being a plaything for tech geeks, profiteers, and shady dealers. Nowadays, it’s an asset class that is substantially regulated and even adopted as legal tender. Some large investment banks even acquire Ethereum and other cryptocurrencies en masse in order to protect their assets under management (AUM) against the galloping inflation that cripples the traditional financial markets.
For this reason, a foresighted investor should build at least a part of his or her portfolio around cryptocurrencies for the purpose of diversification and to be able to withstand the possible turmoils on traditional financial markets. However, due to the inherent volatility of ETH and the overwhelming majority of other cryptocurrencies, having crypto in the portfolio requires closer monitoring of the occurrences on said markets to be able to enter/exit the position at the most appropriate moment. It’s understandable that most investors don’t have the full time capacity to follow the markets at all times or predict their potential movements. To facilitate this task, the following Ethereum price prediction has been elaborated with the assistance of the advanced instrument dubbed the Crypto Volatility Index (CVIX) to ensure the accuracy and the validity of this ETH price forecast model. But before digging into the Ethereum price analysis and forecast, allow us to reiterate the fundamental rules of proper approach towards investing in cryptocurrencies.
Cryptocurrencies are among the most profitable but also the riskiest assets available in the financial world of today. And while the return on investment here vastly exceeds the ROI associated with stocks, Forex, and precious metals, the violent price fluctuations often result in corrections that often exceed 30% to the downside, even during bullish cycles. Therefore, holding Ethereum or other cryptocurrencies in one’s portfolio could turn into an emotional roller coaster ride for which an investor must be mentally prepared.
Due to the immaturity of the cryptocurrency market in general and the activity of market manipulators, the prices might sometimes move in an unpredictable fashion, which doesn’t coincide with our near-term predictions. Other unforeseeable factors that could exert a substantial impact on the price movement of Ethereum and other cryptocurrencies are more of a fundamental nature, such as the toughening of regulations, technical problems such as hacks, or system congestions, or state-wide bans of cryptocurrencies or major service providers. But even though these factors could temporarily shock the market, they don’t affect our longer-term forecasts that fall in line with the sustainable maturity path.
But the golden rule of successful investing in crypto is never to be reluctant to apply risk management because, in such a volatile environment, it’s the only thing that keeps the investor afloat and doesn’t allow one’s portfolio to endure significant losses. Therefore, apart from relying on our professional Ethereum price prediction, it’s crucial to comprehend where and when to exit the position and have stop losses in place at all times.
Now, it’s time to reveal our short-, mid-, and long-term prediction of the developments on the ETH market that are based on the readings of our unique Crypto Volatility Index that helps us gauge the market sentiment and anticipate the direction in which the market intends to go. As of now, the price of Ethereum is $1 590.77, while the coin currently finds itself at 2nd place in the overall ranking. The said ranking is estimated on the basis of the asset’s present price that is multiplied by its current market capitalization, a formula that is applied throughout all financial markets. Our service constantly monitors any changes in these three areas so that our customers receive the most relevant data regarding the performance of digital asset(s) in their portfolios. It’s also important to take the historical data into account that allows forming a proper understanding of the market structure and its direction.
- On September 25, the price of Ethereum was at $1 580.81 by the end of the trading period, during which the price change amounted to 0.91%.
- A week ago, on September 19, ETH was valued at $1 637.44, which means that since then, the price has fluctuated by 0%.
- A month ago, on August 26, the market participant established the price of Ethereum at $1 646.34; therefore, the coin has made a -3.38% move to reach its present standings.
However, as already explained, the price of Ethereum isn’t the only variable that we consider when making the price prediction. It’s also important to keep a keen eye on changes in the market capitalization of the digital asset under review in order to have a clear view of where the market is heading.
The analysis of market capitalization carries equal importance in both cryptocurrency and traditional markets. In fact, the same mathematical approach is used to determine the overall position and popularity of digital assets and stocks, for instance. Changes in market capitalization - positive or negative - are also indicative of the way in which the said market might be heading, as well as the asset’s potential for making gains or posting losses in both short and long-term perspectives. This particular metric is also used to gauge the dominance of Ethereum in relation to the rest of the cryptocurrency market, the changes in which might also offer hints at its future performance. To determine the current market capitalization of ETH, we multiply the circulating supply, the parameter that will be explained later, by the present value of the cryptocurrency under review. As of today, the market capitalization of Ethereum stands at $191 259 893 789, which forms the basis for its present ranking that was mentioned earlier.
- Yesterday, on September 25, ETH had a market capitalization of $190 061 384 708.
- Last week, on September 19, the market capitalization of the coin in question was recorded at $196 861 665 523.
- A month ago, on August 26, the market value of Ethereum was assessed to be $197 917 288 194.
But while the market capitalization offers a viable indication of the popularity and the dominance of Ethereum, it doesn’t always correlate with the generated trading volume within the same market, which is also always factored in when making the all-encompassing price prediction. Unlike that of stocks, the capitalization of cryptocurrencies, including that of ETH, could be distorted by the irregularly high number of transactions that might occur on the network for a number of reasons, including hacking attempts. A significant spike in such transactions often exerts a direct impact on the price of the underlying digital asset and could result in an unfounded increase of market capitalization that gives investors who are monitoring the market a wrong idea about the genuine value of the cryptocurrency. That’s why it’s of immense importance to pay attention to previous data and refrain from getting involved with the market that showcases the galloping market capitalization as they are often prone to manipulations that could have a detrimental effect on the performance of one’s portfolio.
When it comes to determining the potential of cryptocurrencies, the one of Ethereum in particular, it’s essential to understand where it stands with regard to its market capitalization as this determines the asset’s overall stability and the potential for making significant gains in the future.
- Large-cap
- Cryptocurrencies that have a market capitalization of $10 billion or more, which is sustained over an extended period of time, belong to the cohort of large-cap coins. Investing in these currencies carries reduced risks and ensures that one’s position can be liquidated without a hitch since those markets are guaranteed to have substantial liquidity, which is important to consider if you hold a very big position. In addition, large-cap cryptocurrencies are less susceptible to market manipulations and notorious price dumps since every move within the corresponding market requires vast amounts of capital to be engaged. On the other hand, Ethereum and other large-cap cryptocurrencies might be incapable of posing mind-blowing gains that are often seen on the “slimmer” markets.
- Mid-cap
- The next category of cryptocurrencies is characterized by the market capitalization that fluctuates between $1 billion and $10 billion. These are most suitable for investors who are looking for that sweet spot between risk mitigation, though they are considered to be much riskier than large-cap cryptocurrencies, and the promise of having a “trip to the Moon” that refers to colossal gains of 100X or more.
- Small-cap
- The last one relates to cryptocurrencies with a market capitalization of $1 billion or less. Investing in them means undertaking a substantial risk because these are the markets where the most violent and unpredictable swings occur because it doesn’t take a lot of money to orchestrate a significant price move that could be then carried further by retail traders who are easily falling for either FOMO or FUD, thus instigating massive rallies or huge panic sales. But if you have high risk tolerance and enough knowledge of fundamentals, risk management, and market analysis to separate the wheat from the chaff, low-cap cryptocurrencies might provide a ticket to quick and sometimes enormous profits, though experienced investors prefer to steer clear of those altcoins.
The aforementioned market capitalization of Ethereum places it in the group of large-cap cryptocurrencies that fall under the lower-risk class. Now that you know the distinction between these three categories of cryptocurrencies, it would be much easier to make an educated decision regarding the composition of your crypto portfolio.
As already mentioned, coin supply plays a crucial role in calculating the market capitalization of Ethereum and other cryptocurrencies and proper assessment of their future potential. But it’s also important to be able to draw the line between different types of supply, namely the circulating, the total, and the maximum number of coins in existence.
- The maximum supply refers to the total number of coins that will be generated within the underlying blockchain system, from the initial block to the block at which the production of the asset would stop, which can be found either in a source code or in the technical documentation provided by the team upon the project’s emergence. In our case, Ethereum has an infinite supply of coins, which means that they will be produced for as long as that blockchain exists. The cryptocurrencies with a clear maximum supply are considered to be a preferable investment option because they often adhere to the deflationary model that relies on the predetermined scarcity that ultimately ensures the prevalence of demand over supply, which translates to more sustainable price growth.
- Total supply takes into account the number of coins that have already been produced by various means, for instance, through mining. These cryptocurrencies can be used either for active trading or stored in investors’ wallets or with custodians. This metric also factors in the coins that have been phased out through the process called burning, which is applied for the purpose of controlling the inflation rate. As of now, the total supply of Ethereum is established at 120 231 218 ETH.
- Lastly, the circulating supply is used to calculate the market capitalization and assess the coin’s current standing in the ranks. It denotes the overall amount of ETH that is presently traded across all exchanges, excluding the coins that are staked, locked, frozen, or temporarily put out of circulation for whatever reason. It’s generally believed that cryptocurrencies that have a circulating supply between 60 million and 150 million are the most suitable for long-term investment because they are most likely to appreciate in value over an extended period of time, possibly decades, while maintaining a reasonable inflation rate. At this juncture, Ethereum has a circulating supply of 120 231 218 coins.
Hopefully, this explanation will help crypto investors in their efforts to find the cryptocurrencies that will become a valuable addition to portfolios and contribute to the growth of their net worth in years to come. Please pay particular attention to the assets with the deflation feature as they have proven to be more predictable and, most importantly, profitable in the long run. However, that isn’t the last metric that we take into account when drawing the Ethereum price prediction for the near-term future. Trading volume is something that all cryptocurrency traders are heavily reliant on when analyzing the market and trying to forecast the price movement. This particular term indicates the number of units transacted between buyers and sellers and vice versa over a particular time frame. The elevated trading volume usually points to the increased interest in ETH or other cryptocurrency and often provides strong confirmation of the intentions of market participants. For instance, crypto speculators tend to avoid trading breakouts that aren’t happening on the backdrop of growing trading volume because it signals that the market mightn’t possess enough strength to go past a certain resistance level. The same principle is applied when estimating the strength of the trend or spotting trend reversals. If you are an active cryptocurrency trader, you ought to regularly compare the present trading volume on the Ethereum market with the readings of the Crypto Volatility Index in order to avoid being lured into fakeouts and other deceitful market moves that are of frequent occurrence on the cryptocurrency market.
Also, high trading volume usually showcases that the liquidity is flowing into that market which indicates the general interest in the cryptocurrencies and ensures smooth execution of trades. However, it must be noted that the data related to the ongoing trading volume isn’t that much suitable for making long-term price predictions, though it usually provides valuable insight into the current market situation, thus is crucial for short- and mid-term price forecasts carried out by our proprietary algorithm. A smart cryptocurrency investor mustn’t disregard this metric when picking entry or exit point - the rule of thumb here is to get into the action when the volume starts to rise when the price is pushing out of the consolidation area and abandon the ship once the volume begins to drop after a considerable rally. It’s even better if those price shifts happen in the areas that coincide with historically high volume, which are usually displayed through tall bars on the corresponding indicator that is embedded in all crypto trading terminals. Having covered that, let’s review the trading volume recorded on the Ethereum market over the following time frames.
- Over the past 24 hours, the trading volume associated with ETH reached the point of $3 871 508 608.
- Yesterday, on September 25, the average-weighted trading volume recorded at the end of the trading period stood at $3 080 541 715.
- A week ago, on September 19, the amount of ETH that was exchanged between market participants was estimated at $5 918 318 781.
Now comes the time to explain in detail the essence of the Crypto Volatility Index (CVIX) since it’s a centerpiece of our price prediction model that allows us to foresee the path that Ethereum will follow over the next 1 to 5 years. CVIX is the result of the meticulous work of our team of market experts and software developers that came up with a unique formula for gauging and visualizing the expected market volatility and supplemented it with the innovative deep learning algorithm that sifts through an array of historical market data to deliver the finest Ethereum price prediction in the industry.
Key facts
- The concept behind CVIX stems from the classic indicator called the Market Volatility Index (VIX) that was introduced in 1989 by two market scholars from the United States and then taken up and improved by the experts at the Chicago Board Options Exchange, currently known as Cboe Global Markets. The indicator has proven invaluable when gauging the market sentiment and predicting the volatility. It was commonly used in relation to the S&P 500 index but was later adapted to the specifics of the cryptocurrency market and then significantly improved by our team.
- While VIX was used to gauge the volatility within the next 30 days, CVIX has been ameliorated to the extent that it’s now capable of anticipating the volatility and the market movement for months and even years ahead.
- The indicator has three volatility modes that differ both numerically and visually. The red mode signifies the highest expected volatility that ranges from 61 to 99. The yellow mode indicates that the market is preparing to enter the period of medium to medium-high volatility, the numerical value of which goes from 31 to 60. The green mode is indicative of the lowest anticipated level of volatility that starts at 1 and doesn’t exceed 31.
- The red CVIX hints that the market is about to break loose, which corresponds with high to extremely high investment risk. Engage with the market only if you are a virtuoso of risk management. Having a fixed stop loss is a must in this situation; the position size should be kept to a minimum and with regard to a much larger risk-reward ratio.
- The yellow CVIX suggests that the volatility would be mild but still rather significant, which is considered by many as the most propitious moment for engaging in swing trading if the market structure is favorable. In that instance, one can try to increase the position size, utilize tighter stop losses, and adjust the risk/reward ratio to 1:3 or higher.
- The green CVIX shows that the expected volatility is low to very low and that the market sentiment is the furthest from being fearful. It means that it is ranging or consolidating, which is a perfect time for gathering a sizable position for the cryptocurrency portfolio. In this environment, it’s okay to use a mental stop loss and take larger trades. However, the risk/reward ratio should be higher than 1:1.5, while the adequate ratio would be 1:1.
Having offered the most detailed explanation of all metrics that are used for our Ethereum price prediction, let’s get to the gist of it and lay out the ETH forecast for the period from a week to five years.
