Ethereum has recently undergone some game-changing network upgrades that have been implemented to help solve the scalability issue seen with the Ethereum blockchain. With these latest upgrades, we decided to take a look at whether or not Ethereum has the potential to increase by 250% by the end of 2019.
For Ethereum to increase by 250% from today’s price, the market would need to rise and reach the $500 level as shown in the chart below. This is the July 2018 high.
The Upgrades – Constantinople & St. Petersburg
Ethereum has undergone 2 major hard forks during February 2019, known as Constantinople and St. Petersburg. This upgrade was described as a “maintenance and optimization upgrade,” which saw new rules added to the Ethereum software on a network-wide basis.
Constantinople had been pushed back on 2 previous occasions, in October 2018 and January 2019, due to setbacks discovered in the upgrade code. However, Ethereum developers finally managed to patch these bugs, allowing the upgrade to occur at block 7,280,000.
The hard fork implemented several Ethereum Improvement Proposals (EIPs), which were largely backend updates to the software. However, one of the upgrades also involved the reduction of the block reward given to miners for maintaining the blockchain from 3 ETH per block to 2 ETH per block. This effectively reduces the inflation experienced on the Ethereum network by restricting the incoming supply.
The reduction in Ethereum entering into the market combined with the scalability upgrade provides a very good foundation for the bulls to start a fresh bull run toward the $500 handle. Ethereum’s scalability issue was its main weakness during the great 2017/2018 bull run, as the network could only handle up to 20-25 transactions per second. The Constantinople and St. Petersburg upgrades have now laid the foundation for the Ethereum developers to considerably increase the TPS of the Ethereum network.
Clarity on Ethereum’s Position as a Security
The past few months have also helped clarify whether Ethereum is classified as a security or not. This has been a long-standing debate which could turn messy for Ethereum if it’s ultimately classified as a security, as it would then be subject to ruthless SEC regulations.
However, recent communications from SEC officials have led many to believe that the SEC does not classify Ethereum as a security. In a speech last year, the Director of Corporate Finance, William Hinman, stated that according to his understanding he does not believe that offers and sales of Ether are securities transactions.
This position was further cemented by the SEC Chairman, Jay Clayton, who, without mentioning Ethereum, stated that he agreed with Hinman’s explanation of “how a digital asset transaction may no longer represent an investment contract.”
This hint that Ethereum is likely not to be classified as a security will lay to rest previous investors’ concerns about overregulation.
Long-Term Ethereum Price Analysis
Let us take a look at the Ethereum market against USD and highlight the strong resistance levels that Ethereum will have to overcome before being able to reach the $500 level.
Looking at the daily Ethereum chart above, we can see that the 2 levels of resistance for Ethereum to overcome lie at the short-term bearish .618 and .886 Fibonacci Retracement levels at $170 and $208. This short-term bearish Fibonacci Retracement is measured from the November 2018 high to the December 2018 low.
If the buyers can continue the bullish run higher above $208, then the market will meet more resistance at the longer-termed bearish .382 and .5 Fibonacci Retracement levels (drawn in red) priced at $247 and $298. This longer-termed bearish Fibonacci Retracement is measured from the July 2018 high to the December 2018 low.
Above $300, the bulls will experience significant resistance around the $350 level. This is due to the resistance provided by the April 2018 low becoming new resistance at $357, and the long-term bearish .618 Fibonacci Retracement level at $349.
Before ETH/USD can complete the 250% increase and reach the $500 level, the market will need to overcome resistance at $400, $420, and $465.
In today’s bearish cycle, a 250% price increase may seem like a hopeless dream. However, with signs that the bear market is coming to its closing stages, this hopeless dream may become a strong reality. For a 250% price increase, price action will only need to reach the July 2018 high – which is not too far away in the grand scheme of things, and the market still has over 9 months to complete this.