What Factors Affect The Price Of Ethereum?

by Sachin

Though the past year 2020 was all about ups and downs for Ethereum, by the starting of 2021, Ethereum has started to rise and make new records. In August, it reached the all-time highest value price in spite of the Covid 19 pandemic and the problematic situations. 

The value price of Ethereum has doubled up from $222 to more than $400 by the first week of August 2020. Here we will light up those factors or reasons behind the price rise of Ethereum.

Factors Affecting The Price Of Ethereum

Here are the main factors that are responsible for the Ethereum price fluctuations. 

  • The Growing Digital Finances

People are more getting into the Crypto market, and more organizations or institutions are recognizing different Cryptocurrencies along with the technology and central concept behind this whole Crypto world. Though during its initial years, people did not have faith in the decentralized concept of the Crypto market. 

But as time passes, due to several reasons, people get the idea of decentralized finance in a proper way and get attracted to it. With the rise of DeFi, Cryptocurrencies are also growing. Just after Bitcoin, Ethereum by bitcoin system is the second-best Cryptocurrency that is performing really well in the Crypto market. 

  • ETH 2.0 Supports Ether’s Momentum

There is a positive factor that is supporting the continuous upward movement of Ether. And that positive factor is the prediction for ETH 2.0. In August of 2020, the lunch of the final testnet of ETH 2.0, Medalla. More than 20,000 validators are participating in the network, along with around 650,000 Ether or ETH staked. 

Though they are not the original tokens, and every testnet has its own tokens. It is being predicted that the final launch of ETH 2.0 will eliminate the miners from the network along with the reward users. So, this incentive system will allow the users to get a yield on the Ethers they hold over a long period. This will also minimize the cost of transactions that the holders or users need to spend in the network. 

  • This Is The Season For Altcoins

Just after the rapid fall of the value price of Cryptocurrencies, including Bitcoin and Ether, the Crypto market has witnessed an immediate boost in the price value of those same Crypto coins. But this rise is being seen for all the Altcoins. It has been noticed that, with the rise of Bitcoin price value, the performance of other Altcoins are also impressive. 

By the end of 2020, most of the Altcoins had made their own records of reaching their peak value. The starting of 2021 also brought new surprises. Experts are saying that the season for Altcoins has just started. And the whole of the 2021 year will be the year for Altcoins or Cryptocurrencies. By the third week of January 2021, the value price of Ethereum has crossed $1,400, and the market capitalization is $148.89 billion. 

  • Others

Apart from the three reasons that are mentioned earlier, there are several reasons behind the price rise of Ethereum as well as other Altcoins. People who prefer a decentralized system and lost their faith in the centralized system are choosing Cryptocurrency as an alternative to fiat currencies such as Euros and Dollars. 

In addition to it, inflation does not affect Ethereum or any other Cryptocurrencies. The whole year 2020 was a roller coaster for the Crypto market, but it manages to take its place by the end of 2020. With the falling GDP, these Cryptocurrencies are performing more than the average level and attracting investors to put their money in order to get more returns. 

Conclusion

So, now you get an idea about the factors that are working behind the price fluctuations of Ethereum. The knowledge of these factors will also help you to determine which is the right time to invest in the Crypto market or Ethereum. 

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