With most of the crypto market still reeling from the recent pullback, Ethereum has posted a new all-time high (ATH) and triggered a wave of predictions for 2021.
Ethereum reached a new ATH price of $1,466 in the early hours of Jan. 25, 2021, surpassing its previous record of $1,425. With Bitcoin already doubling its previous price record of $19,500 over the past few weeks, notable industry veterans now predict a similar meteoric rise for Ethereum.
Michael Novogratz, famed hedge fund manager, and an early investor in Bitcoin has called for the ETH/USD pair to reach a new high of $2,600 in the coming sessions.
Novogratz is the CEO of Galaxy Digital, a financial services company that has made significant investments in both Bitcoin and Ethereum.
Ethereum to Outpace Bitcoin in 2021?
While Ethereum has traditionally trailed Bitcoin in terms of price action, it has already seen significant growth since late last year. Trading at around $120 per token back in March 2020, it has now grown by nearly 1,300%. Bitcoin has grown by almost 800% in the same period.
Ethereum proponents also point out that it’s still far from its previous ATH when priced against Bitcoin. The ETH/BTC trading pair is traditionally used to gauge the cryptocurrency’s relative strength.
At current prices, the ratio is trading at a mere 30% of the record it set in June, 2017. To breach that record figure, Ethereum will have to outperform Bitcoin by a significant margin.
While some believe that Ethereum’s trailing price will continue, others claim that the smart contract platform shows more potential. Ethereum 2.0’s successful soft launch in December and the shift to proof-of-stake has likely made a case for a solid price rally.
Strong fundamentals could warrant a bump in valuation in 2021, traders argue. According to a recent report by Bloomberg, market research firm Fundstrat Global Advisors expects Ethereum to surpass $10,500, speculating the digital asset could be “the best risk/reward investment play in crypto.”
Jeremy Allaire, CEO of payments firm Circle, echoed this sentiment. He predicts “explosive growth” for the DeFi industry.
Ethereum May Lead Other Altcoins to Bull Run
Once rolled out, Ethereum staking may lead to a massive lock-up of tokens for extended periods of time. This diminishing supply could spur price growth similar to Bitcoin’s halving events. The halving typically results in a bull run every four years or so.
Given that fully-fledged proof-of-stake is still a few years away, there’s plenty of time for this scarcity to be priced into ETH. While some coins in the market have not enjoyed similar exponential growth, many traders now speculate that altcoins may be the next to follow that lead.
In 2017, most altcoins did not see price growth before the first BTC rally and sell-off took place. Now, it remains to be seen whether or not a similar rally will occur in February and beyond.