Ether (ETH), the native coin of the Ethereum blockchain, has been on a wild roller-coaster ride in 2021. After starting the year at $737, the world’s second-largest cryptocurrency surged to a record high of $4,362 on 12 May, a gain of nearly 500%. It then retreated to $2,714 on 21 May and fell below the $2,000 level to an intraday low of $1,707.60 on 22 June, its lowest level since 1 April and a 61% drop from the peak.
Ethereum’s road to success has not always been smooth, with the project facing criticism from the community for its high transaction fees, slow development of the Ethereum 2.0 update, and the emergence of competitors like Polkadot and Cardano. Nonetheless, it remains one of the most popular projects in the crypto industry, evidenced by the large numbers of dApps, DeFi apps and NFTs using the blockchain. According to State of the Dapps, there are 2,500 dApps currently running on the Ethereum blockchain. Ethereum is attracting interest from financial institutions. CoinShares’ June 1 Digital Asset Fund Flows Weekly said ether products represent more than 25% of assets under management (AUM) of crypto investment products. The Chicago Mercantile Exchange now offers ETH futures trading while the Toronto Stock Exchange has ETH exchange-traded funds (ETFs) available.
However, CoinShare’s Weekly Digital Asset Fund Flows Report for the week ending 28 June notes that on Ethereum “net outflows totalled US$50m, the largest on record”, representing “5% of the US$943 inflows year-to-date”.
With the network in the middle of a major upgrade that will change the way transactions are verified and fees charged, Megan Kaspar, co-founder of the digital asset investment company Magnetic expects the ETH price to advance to fresh highs. In an interview to Yahoo Finance Live in May 2021, she upped her target price range for ether to $8,000-$10,000 by the end of the year. "The shift to proof of stake for block validation reduces carbon emissions by 99.9%, making ethereum a green technology,” explained Kaspar. Although CoinShares’ “Digital Asset Fund Flows Weekly” report suggests ether products experienced $64.3m outflows since the week ending 6 June 2021.
In this article, we analyse the cryptocurrency’s historical performance and recent volatility, reasons behind those fluctuations, price predictions for the coming years and all things Ethereum you need to know to make more informed investment decisions.
Ethereum trading: current price and key drivers
Ethereum price news: what has been happening to ETH in 2021?
ETH started 2021 at $737 and quickly climbed to touch $2,000 in February’s cryptocurrency rally. The price then trended lower, fluctuating around the $1,800 level throughout March. In early April, the coin staged another rally, trading above the $2,000 mark.
The bull run in the broader market was fuelled by major US cryptocurrency exchange Coinbase (COIN) debuting on the NASDAQ on 14 April. ETH soared to a record high of $4,362 on 12 May – up 4,480% since bottoming at $95 on 13 March 2020. (If you want evidence that past price performance is no guarantee of future prices, this is it.)
The coin’s value then plummeted over the following week to $1,952 on 19 May, after a series of tweets from Tesla (TSLA) CEO Elon Musk and reports of a cryptocurrency ban in China rattled crypto markets. Ether ticked up to $2,993 on 20 May only to drop further to $1,737 on 23 May. The coin traded up to $2,911.74 on 26 May as the market sought to find a bottom, and was unable to breach resistance at $3,000.
ETH remained volatile, fluctuating between $2,300 and $2,800 in the first half of June, but gradually traded lower to drop below $2,000 again on 21 June. The coin ended 23 June at $1,989.
ETH key price drivers
As with many traditional financial assets, laws of supply and demand play a significant role in determining the ETH price. There are also several other factors that influence the coin’s value:
The long-delayed series of upgrades to the Ethereum blockchain is a major talking point among investors, who expect it to drive adoption and make ether a serious contender to bitcoin.
The upgrades are hard forks, or splits in the blockchain. Begun in 2020, changes are designed to increase the network’s processing speed, scalability and security, while reducing transaction fees. The network will shift from Bitcoin’s proof-of-work (PoW) consensus algorithm for verifying blocks and mining coins to the proof-of-stake (PoS) algorithm.
The large amounts of electricity used in cryptocurrency mining is a hot topic. Elon Musk cited power concerns as the reason Tesla stopped accepting bitcoin as payment for its cars, a decision that prompted a deep selloff across the crypto markets in May.
Once the blockchain has shifted to PoS, Ethereum claims it will use at least 99.95% less energy, although its energy-use forecasts are estimates.
In April, the Berlin upgrade, originally scheduled for June/July 2020, implemented several Ethereum Improvement Proposals (EIPs). Berlin went live at block 12,244,000 on 15 April 2021. The upgrade included optimising contracts to address transactional efficiencies that have seen transaction fees rise sharply, updates to how the Ethereum Virtual Machine (EVM) reads code, and changes to prevent distributed-denial-of-service (DDOS) attacks.
Simon Peters, crypto asset analyst at eToro, commented on Ethereum’s Berlin hard fork: “Post the network upgrade, Ethereum in particular is proving its use-case, and with developers piling on to the platform, it is little wonder it is gaining so much traction with investors.
The London upgrade is implementing EIPs in stages. Scheduled for 14 July, the release has been pushed back. The upgrade was first activated on test network on June 24, setting stage for the major upgrade on the blockchain mainnet later in July.
The London upgrade is highly anticipated, because EIP-1559 will change the way Ethereum charges gas fees. It will switch from its current auction mechanism, which has resulted in high prices. Instead, according to the proposal, it will “start with a base fee amount which is adjusted up and down by the protocol based on how congested the network is”.
By reducing gas fees, Ethereum hopes to accelerate adoption, and encourage the development of smart contracts on the blockchain for decentralised finance (DeFi) and other decentralised applications (DApps).
If increased scalability leads to increased usage, it can also lead to heightened demand, which could propel the ETH price to new highs. Back in November 2020, Matt Cutler, CEO of Blocknative, spoke about the impact of Ethereum 2.0 launch on ETH: “This will have a long-term bullish impact on the price of ETH – notwithstanding the short-term volatility, which is part-and-parcel of crypto-asset valuations.”
Unlike many other cryptocurrencies, ETH is tied directly to the Ethereum platform, which, as aforementioned, is already home to more than 2,500 decentralised apps (dApps), according to State of the dApps. If individuals continue to dabble in dApps and other blockchain features, such as smart contracts, it could support the value of ETH in the future.
The Ethereum ecosystem has emerged as the first choice for developers launching DeFi applications and non-fungible token (NFT) sales, although there are some new applications that are turning to alternative blockchains.
Ethereum is key to the advent of DeFi, which runs smart contracts on the EVM and enables holders of various cryptocurrencies to use their coins as collateral for financial services, including loans, insurance, trading and savings. The ability to attach real-world assets to contracts enables developers to launch NFTs on Ethereum.
DeFi applications emerged in 2020, offering new capabilities to the burgeoning fintech space. NFTs came to the fore in early 2021, with high-profile multi-million-dollar sales capturing the attention of investors.
At the end of April, the European Investment Bank (EIB), a nonprofit organisation and lending arm of the European Union, announced the issuance of a new type of digital bond built using Ethereum. Meanwhile, at the end of March, payments giant Visa (V) announced the use of USD Coin (USDC), a “stablecoin backed by the US dollar, to settle a transaction with Visa over Ethereum”.
Analysts at Goldman Sachs (GS) argue that ether is better positioned to become the dominant digital store of value. According to the bank’s reportedly “leaked” report, “given the importance of real uses in determining store of value, ether has a high chance of overtaking bitcoin as the dominant digital store of value.
High transaction volume increases the amount of transaction fees on Ethereum’s blockchain. These fees are paid to Ethereum miners, who often sell their tokens on the market, increasing the supply of ETH. Conversely, more ETH tokens are demanded when transaction fees are higher, as you need to own ETH to pay transaction fees.
Media coverage plays a large role in stimulating demand for cryptocurrencies. With the growing popularity of DeFi and NFTs, ETH has enjoyed its place in the spotlight, attracting investor interest.
Demand for inflation hedge
The inherent instability of central bank currencies has boosted investors’ interest in alternative stores of value, such as bitcoin and altcoins. Ether’s rank as the world’s second-largest cryptocurrency by market capitalisation makes it the coin of choice for numerous investors.
The global health crisis caused by the COVID-19 pandemic has also played a role in boosting investors’ ether projections. As governments injected trillions of dollars in fiscal stimulus into their economies and eased monetary conditions, ETH rose in value as a hedge against inflation. And even though ether has an unlimited coin supply, that does not disqualify its use case as a store of value.
John Willock, CEO of crypto custody provider Tritum, noted: “ETH is quickly becoming recognised as an exciting asset as a standalone.”
Price of bitcoin
The BTC price tends to have an impact on the broader market, with altcoins following a similar price trajectory set by the world’s largest cryptocurrency. Historically, the movement of ETH has been correlated to BTC. So, when bitcoin goes up, so does the price of ether. And if BTC falls, ETH almost always follows.
According to Coinmetrics, by 3 June 2021, ether’s correlation to bitcoin had soared to 0.8, the highest since 22 April. On 24 June, the figure slipped to 0.78.
Ethereum trading: trader sentiment
According to analysis shared by the team at Santiment on 1 June, trader sentiment surrounding ETH is “showing signs of impatience and exhaustion” as the coin has struggled to reach the $3,000 level after falling sharply in May.
Santiment’s latest report of 24 June suggests that “the perception toward #Ethereum here on #Twitter is at its lowest levels since June, 2018”.
The perception toward #Ethereum here on #Twitter is at its lowest levels since June, 2018. Fear has gripped the #crypto markets clearly, and $BTC being viewed as the 'safe haven' as its dominance has grown could cause #altcoins to actually be sneaky good. https://t.co/v7moAptXDb pic.twitter.com/cjuseI3FGW— Santiment (@santimentfeed) June 24, 2021
As Ethereum has established itself as a rival to Bitcoin, it’s attracted the attention of wealthy investors and institutions. Some of them have begun accumulating ETH over BTC.
However, it’s crucial to note that even the most experienced analysts get their predictions wrong. Whose stance you choose to believe is down to your own research and view of the asset and market conditions.
So, who is bullish on the ether price and who is advising caution?
Should I buy Ethereum?
Bulls saying “yes”:
US billionaire entrepreneur
“The number of transactions and the diversity of transaction types along with the development efforts in Ethereum dwarf bitcoin. The utilization of Ethereum is much higher. Right now, bitcoin is a more established store of value and there is no reason to think it won’t continue to be for a long time. Ethereum, on the other hand, is booming with development that I think will create so many new applications.”
5 May 2021
Price on quote date $3,522
CEO and founder of Plutus
“FOMO has played a big part, but a lot of this is driven, too, by the rush of smart money and thousands of developers around the world buying ETH. Developers need ETH to pay for building their applications on the Ethereum network. Think of it as a toll fee, where the biggest computer in the world charges you tolls for using its immutable cloud servers and verifying every transaction you make on it.”
16 May 2021
Price on quote date $3,587
Former Ark Invest analyst
“Bitcoin has good reasons not to constantly evolve and change because its product definition is to be a reliable form of value storage. Whereas Ethereum’s product definition is to fulfill all these other tasks. As a consequence, it wants to be an evolving platform that adds features… “If Ethereum captures just 1% of that [$3t global banking] revenue, Ether would be around $40,000.”
4 May 2021
Price on quote date $3,253
Co-founder & CEO of Credefi
“We predict that the price will most probably double from its current state by the end of 2021 to hit over $8,000 per coin… our price target may easily be overtaken. More investors and developers are discovering ETH or moving onto the platform in search of a more robust, stable and secure investment vehicle.”
16 May 2021
Price on quote date $3,587
Should I sell Ethereum?
Bears saying “no”:
“Big Short” investor
"All hype/speculation is drawing in retail before the mother of all crashes. When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries. History ain't changed."
18 June 2021
Price on quote date $2,231
Your decision on whether to buy or sell ether should be based on the information available from your personal research, your risk tolerance, the spread of your portfolio and any hedging you have in place, taking into account how much you are prepared to put at risk.
Ethereum price predictions: algorithm-based forecasting services
According to CoinCodex, technical analysis indicators for the ether price were neutral on 5 July, with 23 giving bullish signals and 8 giving bearish signals. At around $2,280, the coin was trading above the 200-day simple moving average (SMA), although it remained below the 50- and 100-day SMAs and 50- and 100-day exponential moving averages (EMA). There was short-term support around $2,219, with resistance at $2,409 and above.
Based on the forecasting service’s Ethereum prediction (as of 5 July 2021), the coin will start August 2021 at $2,134, rising to $2,936 at the end of the year. It suggests the price will move above the $4,000 mark in 2022, end the year at $4,890 and reach $10,762 by the end of 2025.
According to the website, the average future price of Ethereum will stay within the range of $1,800-$2,000 throughout 2021. For the longer term, the coin is expected to experience steady growth, rising to close 2022 at an average price of $2,593, $3,003 in 2023 and $3,396 in 2024.
Economic Forecast Agency
This ETH forecast, offered by the Economic Forecast Agency, suggests the price will fall to average $1,938 by the end of August and end the year at $2,138. It estimates the price will hit $4,922 in December 2022, climb higher to $5,732 by the end of 2023 and fall back to $1,588 by the end of 2024.
The Ethereum outlook from Digitalcoin remains bullish, predicting the price will average $3,184 in 2021 and rise to average $3,977 in 2022. Over the longer term, it projects the ETH price will climb to average $6,883 in 2025 and $9,983 in 2028.
CryptoGround’s ETH forecast is also rather optimistic. It estimates the cryptocurrency to trade at $3,319 in one year, reaching $5,353 in five years.
While the majority of Ethereum projections seem to be bullish, cryptocurrency markets remain extremely volatile, making it hard to predict what the price of the coin will be in a few hours, and even harder to give long-term estimates. We recommend that you always do your own research and consider the latest market trends and news, technical analysis and expert opinion before making any investment decisions.
Big ether backers and holders
Net worth: $1bn
Russian-Canadian computer programmer Buterin created Ethereum in 2013, when he was 19. Buterin holds around 333,500 ether in his public wallet – valued at $1.45bn at the peak.
"It feels like crypto is close to ready for the mainstream in a way that it wasn't even four years ago… Crypto isn't just a toy anymore."
20 May 2021
Price on quote date $2,784
Net worth: $500-$600m
After co-founding Ethereum, technology entrepreneur Hoskinson went on to found the Cardano blockchain platform.
“What’s really cool is that Ethereum [is] getting to the point where it has the same network effect as Bitcoin, but the community has a completely different culture. They love evolving and upgrading… If I had to bet between just those two systems, I’d say nine times out of ten Ethereum is going to win the fight against Bitcoin.”
21 June 2021
Price on quote date $1,888
The Winklevoss Twins
Net worth: $1.6bn each
Cameron and Tyler Winklevoss, who co-founded the Gemini cryptocurrency exchange, are among the first bitcoin billionaires. They also hold ether.
“There’s so much building happening there [on Ethereum] that there’s where you want to go, that’s where the eyeballs are. The thing that has to happen is scalability and throughput: its ability to process many transactions cheaply.”
3 June 2021
Price on quote date $2,855
Co-founder Real Vision
Pal said in May that his ETH holdings have surpassed his BTC. He expects Ethereum to follow Bitcoin’s scale and has a long-term price target of $20,000.
“It is the SAME as Bitcoin, at the SAME point in its adoption cycle, with the exact SAME price and its market cap is rising faster… and suggests that its adoption cycle might be more dramatic too.”
Price on quote date $1,805
Ethereum price history
Biggest ETH price swings
Cryptocurrency investors should be aware that the markets are frequently subject to wild price swings. It’s important to keep in mind that past performance is no guarantee of future returns and you should never invest more than you can afford to lose.
Asset’s profile: everything you need to know about ETH
Ether (ETH) is the world’s second-largest cryptocurrency. It was created in 2015 by Vitalik Buterin as an alternative to bitcoin, making it the first “altcoin”. Buterin sought to address the lack of scripting language for Bitcoin, which he said had “too limited functionality”.
Ether is the native crypto coin for the Ethereum blockchain, a distributed ledger technology. While bitcoin is viewed as “digital gold”, Ethereum is a software platform that is increasingly being used by developers to run other cryptocurrency coins and tokens as well as decentralised applications (DApps) that use smart contracts. These include decentralised finance (DeFi) and non-fungible tokens (NFTs).
Ethereum was created using the same Proof of Work (PoW) consensus algorithm as Bitcoin to verify transactions on the blockchain and mine the cryptocurrency. This is a highly energy-intensive process and has opened cryptocurrencies to criticism on the basis of environmental concerns. Ethereum is in the process of a series of upgrades in 2021 that will shift it to the Proof-of-Stake (PoS) consensus that will allow it to increase its transaction processing while drastically reducing energy consumption.
Changes in the protocol of blockchains that create a permanent split are known as “forks”. So-called “hard forks” result in splitting a cryptocurrency to create a new currency running on a separate blockchain. A hack of a security vulnerability in the Ethereum blockchain resulted in the theft of $50m in ether. A disagreement among the developer community over the decision to erase the theft from the blockchain resulted in a hard fork, with the original blockchain becoming known as Ethereum Classic (ETC).
Expanse (EXP), a second Ethereum hard fork, operates as a centralised autonomous organisation (DAO) rather than a coin or token. A third, Quorum, is a private fork developed by investment bank JP Morgan Chase in an open-source initiative. More recently, the series of Ethereum 2.0 updates – named after cities that have hosted Ethereum developer conferences – have been processed as hard forks, including Istanbul and Berlin, with London to come.
On 24 June 2021, there were 116.4 million ether coins in circulation. Unlike bitcoin, which was designed with a maximum supply of 21 million coins, ether was created without a supply cap, although it has a maximum annual supply of 18 million coins. The upgrade to Ethereum 2.0 will take coins out of circulation, creating the potential for demand to surpass supply and increase ether’s value.
Like bitcoin, the ether price is highly volatile, making it controversial among investors and market observers. The explosion of NFTs and DeFi applications in early 2021 has increased debate among the cryptocurrency community as to whether it can surpass bitcoin and makes it an asset to watch. The Ethereum market capitalisation reached $484bn at the height of the market in May 2021, leaving it a long way to go if it’s going to catch up with bitcoin’s peak above $1trn.
Is Ethereum a good investment?
There are pros and cons to investing in any financial assets, and ether is not an exception.
As with any speculative asset – particularly highly volatile assets like cryptocurrencies – trading ETH carries high risks that investors should take into consideration before adding the coin to their portfolio.
Ether’s price history is highly volatile. The ether price has surged and crashed rapidly several times in the past few years. While some prominent investors and analysts expect the market to reach new highs over the long-term, others remain more sceptical.
There are several advantages and disadvantages to trading ether.
Whether ether is a good investment for your portfolio depends on your risk tolerance for trading highly volatile assets and whether you expect the cryptocurrency markets to rally in 2021.
Some cryptocurrency analysts and investors expect ether to rise as the blockchain transitions to Ethereum 2.0 and developers roll out new DeFi applications. However, investors should keep in mind that cryptocurrency prices can fluctuate wildly, and the price could fall again even if the Ethereum forecast for years ahead looks bullish
You can buy ether on cryptocurrency exchanges like Binance, Coinbase, OKEx and Kraken. You can store the coins on the exchange or withdraw them to a secure cryptocurrency wallet and protect them from hackers.
Alternatively, you can trade ether with contracts for difference (CFDs). Capital.com offers ETH trading via CFDs to speculate on the value of the cryptocurrency against a range of fiat currencies, including the US dollar, euro, British pound, Australian dollar and Singapore dollar, as well as against bitcoin.
If you aren’t familiar with CFDs, they give investors the opportunity to capitalise on both bullish and bearish price action. You can either hold a long position, speculating that the ETH price will rise, or a short position, speculating that it will fall.
There are differences between buying a token and trading a CFD in the cryptocurrency market. When buying a token, it‘s stored in a digital wallet. When trading CFDs with Capital.com, the product is stored in your account with an online broker, regulated by several financial authorities, including CySEC and NBRB. Moreover, you are more liquid when you purchase CFDs as you are not tied to the asset: you have merely purchased the underlying contract.
As a leveraged product, CFDs are designed to maximise gains, which can be large on volatile assets like cryptocurrencies. However, you should be aware of the high risk involved as the use of leverage also magnifies losses if the asset price moves against your position.
CFD trading on cryptocurrencies is currently not available in the UK under FCA regulations.
Learn more about crypto CFD trading with our comprehensive guide. Sign up for an account with Capital.com and follow the latest ether news and price predictions to spot the best trading opportunities.
Why trade ETH CFDs with Capital.com?
Advanced AI technology at its core: a Facebook-like news feed provides users with personalised and unique content depending on their preferences. If a trader makes decisions based on biases, the innovative SmartFeed offers a range of materials to put him back on the right track. The neural network analyses in-app behaviour and recommends videos, articles, news to polish your investment strategy. This will help you to refine your approach when trading a volatile asset like ether.
Trading on margin: providing trading on margin with the help of CFDs, Capital.com gives you access to the cryptocurrency market even with a limited amount of funds in your account.
Trading the difference: when trading ETH CFDs, you do not buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of the ETH price. CFD trading is nothing different from traditional trading in terms of strategies. A CFD investor can go short or long, set stop and limit losses and apply trading scenarios that align with their objectives.
All-round trading analysis: the browser-based platform allows traders to shape their own market analysis and forecasts with sleek technical indicators. Capital.com provides live market updates and various chart formats, available on desktop, iOS and Android.
Focus on safety: Captal.com puts a special emphasis on safety. Licensed by the CySEC, NBRB and ASIC, it complies with all regulations and ensures that its clients’ data security comes first. The company allows you to withdraw money 24/7 and keeps traders’ funds across segregated bank accounts.
Ethereum glossary of terms