The price of Ethereum (ETH) is expected to be at US$5,114 by the end of this year, according to the average of forecasts collected from a panel of 50 finance and crypto experts surveyed for Finder’s most recent Ethereum Price Predictions Report.
Ethereum’s Ether traded at US$4,416 today, a new all-time high for the world’s second-largest cryptocurrency by market value, according to CoinGecko data.
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What’s driving Ethereum’s growth
The survey of experts by Finder — a data and analysis firm headquartered in Sydney — was conducted from Sept. 24 to Oct. 11 this year. Panelists are allowed to own cryptocurrencies, including Ethereum. According to Finder, the published results came from a truncated mean, with the outlier responses in the top 10% and bottom 10% removed.
One of Finder’s panelists for this survey was Daniel Polotsky, founder and chief advisor of CoinFlip, a U.S.-based Bitcoin ATM network. Polotsky told Finder that he expected Ethereum to end the year at US$4,500 and that Ethereum’s growth could even surpass that of Bitcoin’s. “Ethereum does a better job of supporting development on its blockchain and will have a more lightweight proof-of-stake mining model than Bitcoin [which] means that it can potentially be the backbone of Web 3.0.”
Other Finder panelists who were bullish on Ethereum cited the blockchain’s range of use cases and first-mover advantage.
“Ethereum is currently hosting an already large but still quickly growing alternative financial system in decentralized finance or DeFi,” Origin Protocol co-founder Joshua Fraser told Finder. “Eventually Ethereum will be one of the main financial settlement layers of the world. ETH price will reflect this future reality.”
Is Ethereum’s market share under threat?
While rival blockchains such as Binance Smart Chain, Cardano, Polkadot, and Solana have emerged, the vast majority of DeFi protocols and stablecoins operate on the Ethereum network, and Ethereum still dominates with over US$60 billion of total value locked (TVL) in DeFi protocols, according to DeFi Llama.
“Ethereum has the advantage of being the first mover, which is the reason why almost 80% of applications are built on Ethereum’s network, according to State of the DApps,” Iwa Salami, associate professor at the University of East London, told Finder. Salami predicted that Ethereum would
“Thus far, cheaper and faster blockchains (like Solana and Avalanche) are still not threatening competitors to Ethereum in this respect, which means Ethereum is likely to maintain its dominant position for some time to come.”
But on the whole, the Finder panel still expects Ethereum to lose an average of 30% of its market share to other layer-1 solutions, such as Solana (SOL), Terra (LUNA) and Avalanche (AVAX) over the next 12 months, with one in 10 panelists believing that Solana will one day overtake Ethereum as the primary DeFi platform.
“The jury is out on whether SOL will be the leader or one of the others,” said Gavin Smith, general partner at Panxora Crypto. “The key to the winning player in this sector will be transaction costs coupled with transaction speeds.”
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Ethereum’s cost issues
Smith is among those who are bearish on Ethereum’s price, predicting that its Ether token will close 2021 at just US$3,000 — or more than 25% drop from its current price levels.
“The ETH core developers have been extremely slow resolving the transaction cost issues on the Ethereum blockchain,” Smith told Finder. “The costs have reached a point where most smart contract operations are now too expensive without integrating a level-two solution. Other smart contract blockchains are showing better technology solutions that support a greater number of transactions at a lower cost.”
Amid the explosive growth of DeFi and NFTs, scalability has been a key issue for Ethereum as the applications and number of users continue to grow.
Work is underway to make Ethereum more scalable, secure and sustainable with the Eth2 upgrades taking place progressively. The Beacon Chain upgrade, implemented in December, marked the first of the Eth2 upgrades and brought staking to the Ethereum ecosystem. But Ethereum creator Vitalk Buterin, at a conference in Shanghai this week, also said that a full Ethereum 2.0 rollout could take years.
“The Merge” — Ethereum mainnet’s merge with the Beacon Chain’s proof-of-stake system — will mark the end of a proof-of-work Ethereum and is scheduled to take place in 2022. Sharding, a multi-phase upgrade to improve Ethereum’s scalability and capacity through the use of shard chains to spread the network’s load across 64 new chains, will follow in 2022, after The Merge.
Altair, the first mainnet upgrade to the Beacon Chain, has been scheduled for epoch number 74,240 on Oct. 27, 2021, at 10:56:23 a.m. UTC. An epoch is the main time-measurement unit in Eth2. Each epoch is a period of 32 slots and corresponds to approximately 6.4 minutes.
“This upgrade brings light-client support to the core consensus, cleans up beacon state incentive accounting, fixes some issues with validator incentives, and steps up the punitive params as per EIP-2982,” according to an Ethereum Foundation blog post.
The majority of the Finder panelists (78%) polled expected the Eth2 upgrade to solve Ethereum’s scalability issues.
Speaking at the 2021 Shanghai International Blockchain Week this week, Buterin said layer 2 was the future of Ethereum scaling and the only safe way to scale Ethereum while preserving decentralization that is so core to the blockchain.
The Eth2 roadmap offers scalability and the earlier phases of Eth2 are approaching quickly, but base layer scalability for applications is only coming as the last major phase of Eth2, which is still years away, Buterin said. Rollups — a Layer 2 solution that handles transactions outside the main Ethereum chain (layer 1) but posts transaction data on layer 1 — could help provide an immediate and significant increase in Ethereum’s scalability.
See related article: Vitalik Buterin speaks: What lies in the future of Ethereum?
Ethereum’s price outlook in 2025 and 2030
Overall, Finder’s panelists believe the long-term prospects for Ethereum are strong and price outlook favorable. They collectively predict, on average, that Ethereum prices will jump to US$15,364 by 2025 and then triple to US$50,788 by 2030. The majority of the panelists — 63% — said now was the time to buy Ethereum.
But a significant minority — roughly two out of five — of Finder’s panelists predicted that Ethereum’s price will be worth less than its current value at the end of 2021. Some 28% of the experts told Finder that it was time to “hodl”, while 9% of panelists saying it was time to sell off that Ether.
See related article: Ethereum price touches new all-time high in altcoins rally