Ethereum’s price declined sharply today as a market sell-off saw cryptocurrency values across the board drop heavily. But does the second-placed altcoin have the potential to shine in 2018?
The beginning of January proved to be a promising start for the price of ether. Data from CoinMarketCap show that it was trading at an all-time high of over $1,400 on the 13th January. The positive start to ethereum has even seen one expert projecting that it will reach between $2,000 and $3,000 by the middle of 2018 before hitting between $5,000 and $7,000 at the end of the year.
Yet, despite the promising start, the value of ethereum has taken a drastic hit. At the time of publishing, it has fallen below $600 again, and is trading at $596, dropping a near 10 percent in 24 hours. With the likes of ripple and bitcoin cash breathing down ethereum’s back, the second-placed coin needs to pull a few tricks out of the bag.
According to ethereum co-founder Steven Nerayoff he believes that an increase in the number of projects build on the technology could see it overtake bitcoin. Speaking in January, Nerayoff said that:
“What you’re seeing with ethereum is exponential increase in the number of projects – there are billions of dollars being poured into the ecosystem right now – maybe 10 times more projects this year than last year, which could easily lead to a doubling, probably a tripling in price by the end of the year.”
While this may be the case there are several factors that could impact the price of ethereum as we get further into the year.
Initial coin offerings (ICOs) are coming under greater scrutiny from regulators. This can be seen from the U.S. Securities and Exchange Commission (SEC), which has released several statements regarding the space. Yet, traders are also becoming weary of them given the fact that so many ICOs that claim to be legitimate end up seeing those behind them pulling an exit scam. With less people taking part in ICOs, fewer investors will be buying ether, which, in turn, could negatively affect its price.
Another factor to consider is ethereum’s network congestion. For a time, the network congestion was low. However, the introduction of CryptoKitties illustrated how improvements need to be made for it to be able to handle a basic game.
Also, competing platforms that offer a place to run ICOs and other operations may be something that impacts the price of ether. These include the likes of NEO, NEM, Stellar, and Qtum. With these platforms gaining prominence it’s likely that they could draw in more projects into the next year.