In 2018, Ethereum rallied as high as ~$1,430 on the back of an influx of demand caused by the then-ongoing initial coin offering (ICO) boom.
ICOs had to raise money, and ICOs often raised money so through ETH — a widely-adopted, well-known, and easily-accessible cryptocurrency. Hence, the demand for Ethereum spiked as investors began to speculate they could multiply their Ethereum by trying their hand at early-stage crypto startups.
With ICOs now bust, one of the cryptocurrency’s biggest demand drivers is gone. Avi Felman of BlockTower Capital recently went as far as to brand the all-time high price ETH reached a “red herring,” citing the unique and now-defunct dynamic that pushed the asset higher:
“The ETH all time high price is likely a red herring, and was driven by a very specific dynamic (buy ETH to place in ICOs, no sell pressure because ICO treasuries didn’t think about that).”
The ETH all time high price is likely a red herring, and was driven by a very specific dynamic (buy ETH to place in ICOs, no sell pressure because ICO treasuries didn’t think about that). BTC had no such dynamic. When BTC reaches its new ATH hard to see ETH anywhere near its ATH
— Avi IS RIGHT (@AviFelman) June 15, 2020
Yet a promient analyst has postulated that demand for Ethereum will eventually hit a new all-time high.
Related Reading: Buying Bitcoin at $8k or $9k Won’t Matter in 2 Years: Fund Manager Explains
What Could Drive Ethereum Demand to Fresh Highs In the Coming Cycle
In a recent Twitter thread, a trader revealed a confluence of reasons why the demand for ETH will reach a new peak.
His attempt to do so comes as sentiment has been shared by certain traders and commentators that ETH’s golden era is long passed.
Some of the reasons the trader listed are as follows:
- DeFi services are going “parabolic,” which should eventually lead to a spike in ETH demand.
- The ICO boom is unlikely to be the only ever macro driver of demand for Ethereum.
- The Ethereum 2.0 may make “every other blockchain redundant,” causing a surge in demand for ETH as demand for blockchains may rise.
- ETH’s gains were actually relatively muted in 2017 compared to some other coins like XRP and XVG, potentially imbuing the altcoin will potential to rally even higher in the next cycle. “More altcoins saw larger returns without any real chain activity or metrics. We could say ETH was a fair value for the 2017 period,” the trader explained.
Not Everyone Is Convinced ETH Is a Good Investment
These catalysts may be bonafide, but not everyone is convinced that Ethereum
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