(English) Ethereum prediction for the end of 2022 2022年12月02日 – Posted in: Uncategorized – Tags: ,

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Cryptocurrency markets went through a wild ride throughout 2022. There have been many upsets, crashes, and scams that have occurred throughout the year that have literally erased fortunes overnight.

It’s been rough on all global markets throughout the year, with many that appear to be ending in the red or breaking even by the end of the year as well. Inflation seems to be finding its limits but not after the cost of raising interest rates across many economies. This has made the cost of goods only go up, with the cost of money also going up.

With these tighter budgets, and incomes not keeping completely at pace with inflation, it has left less room for investment. That means for those that look at and consider crypto; there may be less of an appetite for crypto investments.

With that said, even as we close out the year, there’s a consensus that there may still be an opportunity for a breakthrough in the crypto markets since they’ve already taken such a large beating throughout the year. This is especially true for those cryptocurrencies that are dominant market leaders with massive use cases, such as Ethereum.

A look into Ethereum

Understanding why Ethereum may head towards a much larger price, even with only one month left in the year, can happen when we take a moment to understand what the Ethereum network is all about.

Ethereum is an open-source cryptocurrency platform as well as a token that helps to power everything built on the Ethereum network. A substantial amount of the overall alternative coin market is built off of the Ethereum network, which also helped fuel the expedient rise of blockchain-based technologies and the popularity it has seen in such a short time.

Smart contract functionality

The power of smart contracts was the first core functionality that has come about since the dawn of Ethereum. These are self-executing by nature and are also completely trustless verification systems. They are written in code that lays out the terms and agreements of these ‘contracts’ and doesn’t require any additional due diligence or even identification, allowing for ultimate privacy and allowing the transactions to be as anonymous as people want them to be.

In addition, this protocol helped build transparency into the crypto market world, as every single transaction ever made on the network is viewable and accessible by everyone.

            The dawn of NFTs

As if trustless transaction verification wasn’t enough through smart contracts, similar functionality enabled the creation of Non Fungible Tokens, commonly referred to as NFTs. This allowed for digital content, whether it be artwork, writings, music, and so on, to be encoded into these NFTs, so there’s no question about ownership and uniqueness. That means that when something is created as an NFT, it cannot be copied or cloned in any way.

            Expanding into decentralization

Ethereum yet again proves its worth as it enabled the actual core value and functionality of what cryptocurrencies were supposed to be all about, and that is to have a decentralized financial institutional level network, with no one person or company having complete control over it.

Ethereum has helped to spawn and expand the emergence of decentralized applications, as well as decentralized finance or DeFi. That means there’s the ability to transact and trade cryptocurrencies without the need for centralized exchanges and without the need to have these exchanges have ownership or custody of your information, accounts, and cryptocurrency. We’ve already seen what happens when an exchange or even an investment firm has custody over your crypto assets and how they can easily lock them up or lose them completely in the case of FTX.

How Ethereum makes money

With all of this ecosystem being built, there’s an actual use case, which helps with its value and volume metrics, that whenever you want to do something on the Ethereum network, which is, again, the primary network to handle applications on a blockchain, you need to pay a fee. That fee is known as a gas fee and is akin to paying a toll to be able to unlock that service and transact within the Ethereum network. Ether, the name of the Ethereum native token, typically pays this gas fee.

So that means if you want to send your friend Ether or other tokens on that chain, then you will always have to pay that transaction fee to send that cryptocurrency to your friend’s wallet, regardless of if it’s on a centralized exchange or a decentralized wallet. For example, suppose you want to develop an NFT or even a dApp on the Ethereum blockchain, which requires paying a fee every time. Even moving the NFT from one location to another is considered a transaction and requires this Ether as fuel to handle the movement.

With such a fantastic use case, it’s bound to help promote the price of Ethereum by the end of the year from where it currently is. Yet how come it has suffered from its peak of over $4,000 to trying to hold steady above $1,000 per Ether at this time of the year? It shouldn’t matter if other cryptocurrency issues occurred or the non-crypto market was affected, right?

There are always transactions happening, and that means with transactions, there’s an inherent need and value to Ether itself. In fact, many have speculated that it may be possible one day for Ether to have its price go beyond Bitcoin, which is the market leader in price per token, as well as having significant dominance in the overall cryptocurrency market.

Systemic Updates played a factor

2022 was a big year for Ethereum as much as it was for the entire cryptocurrency industry. Yet, with Ethereum, it was all about the technology and how it actually would function. Previously, why Ethereum was such a lucrative venture, especially when it came to those gas fee transactions, is that it followed a concept called proof of work.

In short, that means there would need to be machines that would need to verify the transactions, and then those machine operators would be rewarded with the actual transaction or ‘gas’ fees. It was quite a lucrative business, and with the push for the entire network to grow, it simply compounded to revenue generation through these fees.

Yet one of the two major factors that may have affected the skyrocketing pricing was that the entire Ethereum network was being shifted to work in a different way. This is known as a proof of stake functionality that didn’t need to have complex machines run their algorithms to verify transactions but worked in a way where people could pledge their tokens and ‘lock’ them in to help verify transactions in a much simpler manner. This helped alleviate the sustainability and ecological problem with crypto mining.

No longer was it needed to run these machine rigs 24/7 eating up electricity simply to verify transactions. Yet, at the same time, it took away a major source of income for many and changed the entire functionality of how Ethereum worked. So while it did lower the ‘gas’ fees substantially, it also made it unappealing for those invested in Ether, based on the gas fees that could be charged.

Previously, the gas fee depended on how much of the entire Ethereum network would be used, and people could pay extra to skip the line and verify their transactions. This would lead to gas fees that could be a couple of hundred dollars worth of Ethereum, regardless of the amount that was sent. Nowadays, it’s only a few dollars as the merge has shifted to a proof-of-stake model and pushing the number-crunching machines out.

The rise and fall of NFTs

NFTs also hit their peak earlier in the year, as people started feeling the value of some of these NFTs was not possible. Individual NFTs were going for several hundred thousand dollars, if not millions’ worth of Ethereum (as everything is priced in Ethereum).

The craze led to people trying to get on board to ‘mint’ or produce NFTs, which, you guessed it, required paying those gas fees. At the peak, these gas fees could go as high as $1,000 worth of Ethereum, and producing more for the collection would also be quite a costly endeavor. This all fueled the demand for Ethereum, which helped to push the pricing up to its all-time peak.

Yet when it started to appear that the usability or functionality of an NFT was severely limited and was purely focused on celebrity endorsements, and as an art piece, it began to lose its luster. Furthermore, as the market also became flooded with NFTs, the value of an NFT also started to plummet as there were too many options on the market, which eventually became watered down in value.

Competition coming in as well

Ethereum was revolutionary in creating smart contracts and an ecosystem for blockchain-based functionality as was needed. At the same time, though, it became an open-source technology, allowing many clones to appear. They came in two flavors, either building on top of the Ethereum network, known as ‘layer -2’ technology, or building their own separate chain, such as what Binance did with its Binance Chain.

This means that there were more players on the market and that, at the time, Ethereum was proof of work. This meant they were better, faster, and cheaper than the Ethereum network, which was constantly plagued with ever-slowing transactional volumes. These upstarts and layering solutions would enable transactions in the pennies and in seconds.

Yet they themselves have not faired well when looking at their token prices, and since Ethereum has already switched over to proof of stake verification models, it means that there’s a turnaround ready to happen.

So what does the end of the year look like for Ether?

Many are speculating a big bullish push for Ether and many cryptocurrencies with the same type of functionality. This is because the issues that plagued Ethereum have been technologically eliminated, and it still holds its dominance over replacements, which simply may not be needed anymore now that Ethereum is working as intended.

For those that are in the bullish spectrum, they are looking at Ethereum ending in the $4,000 to $7,000 range, which is exceptionally high considering that as we enter into December 2022, the price of Ether is around $1200. Yet the reasoning comes from the fact that the merge was a success and that the value of Ethereum and the usage of it didn’t go down and crash completely.

There were plenty of opportunities throughout the year where Ethereum and the whole cryptocurrency market could come crashing down and completely destabilize, wiping out everything, and it didn’t. Instead, Ethereum has shown its use case, its resilience, and its ability to move onward.

Keep in mind that the bullish sentiment will happen to go into 2023 as well and that even if the world ends up in that global recession, the necessity of Ethereum for developing future blockchain-based technologies will still help maintain and grow its price point and value. As a result, it has maintained its support levels and continues to consistently break through resistance levels, even after major issues related to the crypto market were announced.

The other side

On the other hand, there are some, albeit a few, that are feeling that we still haven’t reached the bottom with cryptocurrency and Ethereum in general. While they don’t feel that Ethereum will go down to $0 per token value, there are those that believe that it can break below $1,000 and close out between $500 to $750 come year-end.

Yet with such little time left in the year, it will be interesting to see if it maintains its history of volatility and go in that bullish direction upwards. As always, due to the volatility associated with crypto, especially with Ethereum, it’s always a good idea to treat it as a small percentage of your overall portfolio in a speculative manner.

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