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Ethereum(ETH) has had a rough couple of years. After reaching a high of around $1,400 in January 2018, its price crashed to about $80 by December 2018. This long period of low prices is known as the crypto winter, and many people lost faith in cryptocurrencies. However, despite these tough times, I believe that Ethereum is a great investment right now in 2020. Here’s why.
What Happened During the Crypto Winter (2018-2019)?
Form 2018 to 2019, Ethereum and the whole crypto market went through a bad period. The reasons for this are:
The ICO Bubble Burst: In 2017, many projects launched on Ethereum through something called Initial Coin Offerings (ICOs). This meant that people could buy tokens from these new projects using Ethereum. Unfortunately, many of these projects either failed or were scams (that is what Vitalik Buterin said in 2017). As people lost trust in these projects, the demand for Ethereum fell, and so did its price.
Regulatory Concerns: Governments around the world started to look closely at ICOs, with some calling them illegal or questioning whether they were securities. This created uncertainty and scared off investors.
Market Over-excitement: In 2017, people became very excited about cryptocurrencies, but that excitement didn’t last. When the hype died down, the market corrected itself, and prices dropped.
Despite the price drop, Ethereum’s developers stayed committed. They kept working on Ethereum 2.0, a major update designed to fix many of Ethereum’s problems and set the stage for future growth.
Why Ethereum is Set for a Bull Run in 2020
Even though the crypto winter was hard, several developments happening in 2020 show why Ethereum is about to rise again. Here’s why I think Ethereum is about to see a major price increase:
1. Ethereum 2.0 Is Coming Soon
Ethereum 2.0 is a big update planned to launch by the end of 2020. This upgrade will change how Ethereum works, making it faster and cheaper to use. The most important change is the move from Proof of Work (PoW) to Proof of Stake (PoS), which will allow Ethereum to process more transactions and use less energy.
- Proof of Stake will also let people earn rewards by staking their Ethereum, creating a new reason to hold onto ETH instead of selling it.
2. The Growth of Decentralized Finance (DeFi)
DeFi is a new type of finance that doesn’t rely on banks or traditional financial systems. Instead, it uses smart contracts on Ethereum. In 2020, DeFi has grown rapidly, with over $4 billion locked in various DeFi applications. Since all of this runs on Ethereum, it drives up demand for ETH.
3. Institutional Investors Are Getting Interested
For the first time, big investors like Grayscale Investments are starting to buy Ethereum. This is different from 2017 when most crypto investors were regular people. Having large institutions buying Ethereum makes it less likely for the price to crash because they tend to hold their investments longer.
4. EIP-1559 Is on the Horizon
Ethereum Improvement Proposal (EIP) 1559 is a change that will make Ethereum more valuable by burning some of the transaction fees. This will reduce the supply of Ethereum over time, which could help push up the price.
Conclusion: Why Ethereum Is a Good Bet in 2020
Even though the last two years have been tough for Ethereum, the future looks bright. Ethereum 2.0, the explosion of DeFi, growing interest from big investors, and changes like EIP-1559 are all reasons to be optimistic. The crypto winter is ending, and Ethereum is in a strong position to lead the next bull run. For those who are willing to invest now, it could pay off in a big way as Ethereum rises again.
2021 might just be the year Ethereum takes off (TO THE MOON!)
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