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21.01.202116:10 Forex Analysis & Reviews: Ethereum beats bitcoin in yearly gains. Will it enter phase of sustained growth?

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Exchange Rates 21.01.2021 analysis

On January 19, Ethereum reached an all-time high of $1,251. Over the past year, Ethereum has gained more than 600%, overtaking bitcoin which has added just over 300% in 12 months.

The launch of the zero phase of the second network, which has been under development for more than a year, is considered an important event that boosted Ethereum's rally. In December 2020, altcoin developers implemented the Ethereum 2.0 deposit contract, to which investors can transfer their virtual coins and multiply their number through staking. The annual profitability is expected to be 10%, excluding costs. The downside is that users cannot withdraw their ETH. This requires the network to reach a 1.5 phase of an updated. The time when this stage will be launched is not known yet.

ETH started its rally in March 2020. On January 10, the altcoin hit a local high of $1,350. Then, on January 11, the cryptocurrency entered the phase of correction and fell to $900. This was a time of a recharge for Ethereum. Now it has a good chance for further growth.

The risk-on sentiments and the return of traders' activity after holidays in the United States had a significant impact on the entire cryptocurrency market. On January 19, Ethereum surpassed bitcoin in terms of daily trading volume. Investors opened $12 billion worth of deals on ETH which is $3 billion more than on bitcoin. At the same time, the data does not take into account those transactions that took place on decentralized exchanges.

Some analysts suggest that in the short term Ethereum may decline in value and consolidate at around $1,400. However, in the long term, the rate of Ethereum is expected to grow. The launch of ETH futures will increase its liquidity and provide many opportunities for price manipulation, which will entail both positive and negative developments.

According to the founder of the stablecoin platform STASIS, Gregory Klumov, Ethereum is rising thanks to the launch of Ethereum futures on the Chicago Mercantile Exchange (CME). Soon after the launch, it will gradually decline. By the way, the launch is scheduled for February 8, 2021. The expert believes that on the CME traders will mostly open short positions on the ether, and this will have an extremely negative effect on its value. Thus, according to Klumov, it would be advisable to fix profit from 25 to 28 January. However, it is worth noting that three months after the expected decline in February, ETH will start to rise again. Moreover, the rate of recovery will largely depend on success of the Ethereum 2.0 update.

There are quite a few experts who are sure that the Ethereum cryptocurrency will advance notably in the near future. So, according to the managing partner of the Moonrool Capital fund, Simon Dedich, the Ethereum rate may well surge to $3,000 after retesting its historical high. Currency.com financial analyst Mikhail Karkhalev also believes in this altcoin and thinks that it has every chance to rise to $2,500 and even $3,000 during this year. This view is supported by another crypto expert Alex Saunders, the founder of the news portal Nugget's News. He believes that in the near future Ethereum may jump to $5,000 and even $20,000.

Andreeva Natalya
analytik InstaForexu
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