Nicole WillingEthereum’s native cryptocurrency – ether (ETH) – moved up with bitcoin (BTC) to reach a new all-time high above $4,850 on 10 November. However, at the time of writing (13 November), the coin slipped lower to trade at $4,635.92.
Cryptocurrency markets have soared this year, driven by rising institutional interest in bitcoin, as well as the emergence of decentralised finance (DeFi) and non-fungible tokens (NFTs) running on the Ethereum blockchain. The ETH price has also found support as a hard fork over the summer introduced coin burning to reduce supply, as part of the Ethereum 2.0 upgrade.
Is there momentum for the price to continue setting new highs? Will ethereum go up or down in the short term?
In this article, we look at the latest ETH price news and forecasts.
Institutional interest in ETH rises
The first exchange-traded fund (ETF) for bitcoin futures in the US was launched in October, with several more waiting for regulatory approval. The bullish sentiment surrounding the bitcoin ETFs has spread to the ether market, as observers expect an ETF for Ethereum to follow. There are several ether ETFs available in Canada, including the CI Galaxy Ethereum ETF, the Purpose Ether ETF and the Evolve Ether ETF.
On 10 November, with BTC trading at a new all-time high above $68,000, the market hit an ethereum price record of $4,859.50.
Bitcoin and ether have attracted increased interest from institutional investors this year, and ETFs make it easier for institutions to gain exposure to cryptocurrencies in their portfolios. As of the end of October, institutional fund inflows into BTC totalled $6.37bn for the year-to-date, while ETH flows totalled $1.05bn, according to a report by cryptocurrency exchange Kraken.
Ethereum news has also been driven by the use of smart contracts in DeFi and NFTs. A report by Chainalysis in September found that central, northern and western Europe has the world’s biggest cryptocurrency economy – and the majority of large institutional-sized transfers in the region went to DeFi platforms in the past 12 months. As a result, most of those large institutional transfers were made in ether and wrapped ethereum (wETH), an ERC-20 token that is commonly used in DeFi protocols.
At the same time, trading activity in the NFT space spiked in the third quarter of this year and continued its bullish momentum in October.
Decentralised applications registered more than two million daily unique active wallets for the first time during October, which was up by 21% compared with the previous month, and 626% year on year from October 2020, according to DappRadar. The NFT space saw $4.2bn in trading volume in October alone, an increase of 2% compared with September, with Ethereum accounting for 82.11% of the total volume. With NFTs on the Ethereum blockchain traded using the ether coin, any increase in activity drives up demand for the cryptocurrency, supporting higher prices.
“The floor market cap for the top 100 Ethereum NFT collections and NBA Top shot was measured at $16.72bn, a 18% increase from the figure recorded in September,” the report said.
While the adoption of alternative blockchains like Solana and Polygon is growing, Ethereum remains the leader in DeFi in terms of total locked value (TVL). According to the report:
The ETH price chart shows that the coin climbed from a low of $1,722.05 on 20 July when the cryptocurrency markets bottomed out to peak at $4,022.47 at the beginning of September during a short squeeze at the end of the summer rally. Ether then dropped back to a low of $2,676.41 on 21 September.
The price trend subsequently turned higher and cryptocurrency markets have rallied across the board. It moved back above the $4,000 level on 20 October, with the $5,000 level as the next potential price target. At the time of writing, the coin traded at $4,635.92.
Can the price continue to advance, or is it setting up for a pullback? What is the analyst outlook?
Ethereum price analysis: will ETH breach $5,000 in the short term?
Analysts at Santiment noted that “optimism that $5k is around the corner appears high. One of the few things holding $ETH back is the fact that the average network fee sits at $63.50, which was last this high on 12 May.”
Ethereum transaction fees, known as gas fees, reached their second highest level ever on 9 November. Fees peaked at an all-time high of $70 on 12 May.
The blockchain-based naming protocol Ethereum Name Service (ENS) launched its governance token airdrop on 9 November, driving gas fees higher as users claimed the tokens. ENS airdrop tokens can be claimed until 4 May 2022, but users were keen to claim them immediately with cryptocurrency prices rallying. More than 7,000 Ethereum domain names were registered on 9 November and 7,000 more on 10 November, up from a previous record of 3,000, data from Dune Analytics shows.
Technical analysis from Kraken shows that ether reclaimed band 5 of its Logarithmic Regression Rainbow in October. Its report noted:
But less ETH was burned in October than September, as Ethereum-based NFT sales declined, Kraken’s ETH price analysis showed:
A total of 870,743.8 ETH had been burned since August at the time of writing (13 November), valued at a total of $4bn, data from Etherscan showed.
The short-term ethereum price prediction from CoinCodex called for a drop to $4,482.86 by 18 November. But sentiment was neautral at the time of writing, with 19 ethereum technical analysis indicators giving bullish signals and 10 bearish signals.
Algorithm-based forecasting site WalletInvestor predicted that the ether price could rise above the $5,000 level by the end of November and trade between $4,500 and $5,400 for the rest of the year. However, Gov Capital suggested the price could consolidate around the $4,700 level for the remainder of 2021 and resume its move higher in January.
It’s important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours, and even harder to give long-term estimates. As such, analysts can and do get their predictions wrong.
We recommend that you always do your own research, and consider the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision. And never invest more than you can afford to lose.
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