As the bull market propels Bitcoin to new heights, it also lays the groundwork for the growth of Ethereum, the second-largest cryptocurrency by market capitalization. Let's explore the potential future of Ethereum in 2024.
As of this writing, Ethereum trades around $3000, marking a 35% increase over the past month. The network anticipates several updates this year, including the potential approval of an ETF. Let's examine Ethereum's outlook for 2024 and identify factors that could influence its growth.
This update marks a major fundamental milestone since The Merge and promises to make the blockchain more attractive and user-friendly for its users.
In light of the technical and fundamental indicators, Ethereum presents as a promising investment for 2024. However, it's essential to remember that this does not constitute financial advice. The inherent risks of investing in volatile assets rest solely with the investor. Always remember to DYOR before making any investment decisions.
Ethereum's Current State: Price, Chart, and Inflation Trends
In the first two months of 2024, Ethereum reached a two-year high, and the overall bullish trend for ETH continues to accelerate.
Ethereum Price Chart. Source: Coingecko.com
Moreover, the ETH/BTC chart shows a positive trend, with Ethereum recovering slightly after reaching a new low at the 0.047 mark.
If Bitcoin maintains a stable sideways trend, it could further improve the ETH to BTC ratio, potentially breaking the overall bearish trend.
ETH/BTC Chart. Source: Whitebit.com
Focusing on Ethereum's fundamental aspects, it's crucial to remember its deflationary model. According to Ultrasound Money, Ethereum's issuance continues to decrease due to the active use of the network, burning over 1 million ETH coins annually. This has led to an overall coin inflation rate of -0.17%, indicating a yearly decrease in the circulating supply of coins.
Ethereum Inflation Rate and Burn Rate. Source: ultrasound.money
This dynamic indicator varies with the network's load. Before transitioning to Proof-of-Stake, Ethereum's annual inflation rate was 3.2%, highlighting the significant impact of The Merge update.
The Ethereum Denver conference, an annual event featuring key figures from the Ethereum ecosystem and its developers, will take place in the US from February 23 to March 2.
Additionally, a significant network update, Dencun, is scheduled for March 13, 2024. This update aims to:
- Increase the blockchain's throughput;
- Reduce transaction fees in Ethereum's mainnet and most L2 solutions.
Ethereum ETF Approval Prospects
Before the Bitcoin ETF received approval, leading cryptocurrency funds, including giants like Fidelity, BlackRock, and Vaneck, had already submitted applications for an Ethereum ETF. SEC representatives have indicated that after greenlighting the Bitcoin ETF, there are no substantial hurdles to approving an Ethereum equivalent.
Betting platform Polymarket puts the odds of an Ethereum ETF approval by May 31 at 47%. Our dedicated article delves into the likelihood and timelines for the SEC's decision on an Ethereum ETF, pinpointing mid-August 2024 as the critical window beyond which the regulator cannot delay the decision further.
Consequently, the likelihood of an Ethereum ETF approval in 2024 stands at a compelling 99%.
Ethereum's Potential Trajectories in 2024
Given its foundational strength, Ethereum is well-positioned for continued growth and setting new highs in 2024. Nonetheless, its trajectory will be influenced by Bitcoin's performance.
We envision three potential outcomes for Ethereum in 2024:
- Surpassing the all-time high (ATH): Should Bitcoin maintain its post-halving momentum, Ethereum is likely to break past its historical peak of $4,866, potentially reaching the $5,500 to $6,000 mark.
- Rising to $4,000 with Extended Stability: In a more neutral scenario, Ethereum could approach but not surpass its high due to Bitcoin's corrective phases.
- Correcting to $1,700–$2,000: While highly improbable, a significant downturn for Bitcoin or a black swan event, akin to the FTX scandal in 2022, could trigger a steep correction for Ethereum.
