The price of Ethereum continues to skyrocket. It keeps on setting new all-time highs for more than a week now. More importantly, though, Ethereum broke through $300 this weekend, and set an intraday high at $354 on Sunday.
That is really amazing in terms of price action, for sure given Ether's flash crash on May 26th. Ether crashed to $130, a decline of almost 40 percent in one day. Since then, however, prices almost tripled, and that is really very powerful.
With that, Ethereum confirms what we have said for a long time: Ethereum is the strongest cryptocurrency. There are 5 reasons for that, and we highlight them in this article. Those reasons confirm our long term price forecast of $1000 Ethereum.
1. Safety and performance
Ethereum proves to be safer and much more performant than Bitcoin. Ether was written to make it possible to build smart contracts, decentralized autonomous organizations (DAOs), decentralized autonomous apps (DApps) and even other cryptocurrencies.
Because of that Ethereum is winning the game in cryptocurrency land. It is becoming the standard for financial applications, transactions, ICOs, driving the price higher. That, in return, triggers investment demand. This is a healthy vicious circle which feeds itself, resulting in rising prices.
2. Investment demand
At the moment of writing Ethereum is closed for public investing. Ether as an investment is only accessible through a wallet which is not a simple process to go through. Moreover, only an absolute minority of investors have opened a wallet.
In April 2017, Grayscale launched The Ethereum Investment Trust (ETC) which is a private fund in Ethereum. It is a real success, and the chart below illustrates how investors are rushing to invest in Ethereum, with the value of ETC almost quadrupling within a month. However, it is a private fund, so not very accessible to a wider audience.
Furthermore, there is no Ethereum ETF yet. An Ethereum ETF would open up access to traditional investors. Moreover, there is no Ethereum IRA to drive the price of Ethereum higher.
Imagine what happens if just 0.1% of retail public and investors starts buying Ether as part of an ETF or IRA, the price of Ether will literally explode.
3. Application demand
There are plenty of cases which confirm that Ethereum is becoming the prefered platform for financial transactions, even for critical applications like interbanking transactions.
The most known case, meantime, is The Enterprise Ethereum Alliance which now counts more than 110 members (large corporations mostly, both within and outside the banking industry). The EEA was officially launched earlier this year with the aim to developi enterprise-focused solutions with the open-source ethereum as a basis.
Moreover, major currencies around the globe are turning to Ethereum to digitize their underlying currency platform. Stated differently, Ethereum is being used to enable digital transformation of currencies. 3 major currencies currently are in the process of integrating Ethereum in their digitization process: the Singaporean Dollar, Russian Ruble, and Chinese Yuan.
A report by the Monetary Authority of Singapore, which in collaboration with a number of banks and blockchain technology firms recently announced that phase one of tokenizing Singaporean Dollars through an ethereum blockchain has successfully completed.
These, and many more cases, suggest that Ethereum is well on its way to become an industry standard. The price of Ethereum will obviously be impacted positively as this trend progresses.
4. ICO demand
This latest Techcrunch article points out that Ethereum has become the go-to cryptocurrency used for most ICOs. Those are Initial Coin Offerings, an alternative of IPOs with a focus on funding blockchain startups.
Based on Tokenmarket.net data the expectation is that all ICOs, as of July 2017, will be based on Ethereum, as suggested by below chart.
This is a direct driver for Ethereum's price. It also suggests the rally in Ether is far from over.
From a price perspective the statistics of Ethereum are amazing. Ethereum is up 240% in the last month and 3000% year to date. Ethereum was the cryptocurrency to bounce the strongest after the flash crash of May 26th. Its chart looks over-extended, with a parabolic rise, but given the fundamental picture outlined above we still see upside potential.
For all these reasons, we stick to our long term Ethereum forecast of $1000.