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Ethereum Price Prediction: What Will ETH Be Worth in 2021?

Ethereum Price Prediction: What Will ETH Be Worth in 2021?

23 Dec 2020

Reading Time: 7 minutes


To understand the Ethereum price prediction for 2021, we should start in the future changes in the mining network of ETH. 

Moving to the Proof-of-Stake consensus mechanism will fundamentally change the mining industry of Ethereum. It's bad news for some miners because the old Proof-of-Work algorithm is going to disappear over time. However, the good news is that the transition is unlikely to happen next year. 

Founder and creator of Ethereum, Vitalik Buterin, said that he was looking forward to big and rapid improvements in the blockchain technology due to the 2.0 version. However, he also reminded everyone that the change of protocol in mining is going to take longer. Therefore, classic miners will still have time to adjust. The initial stages of their Ethereum 2.0 launch are only algorithm tests. All economic activities will still occur in the current network, which won't happen without the miners. 

When Ethereum's demand is increasing, largely due to the DeFi projects, Ethereum mining has the highest profitability. We can see that on the Ethereum hash rate, which is now close to its all-time high on the chart, and it could set new records if the price of cryptocurrency rises even higher. 

Miner communities are confident to work on the Ethereum network for at least another year or more. They're predicting that once the economic activity is transferred to the PoS algorithm, the market for used video cards will have an unprecedented "sale." Still, many are determined to stay in business and just switch to other cryptocurrencies. They already announced that many will want to stay in the current version of the network, saying they are already preparing a bridgehead to meet this demand.

Some experts are speculating that Ethereum Classic will remain on the Proof-of-Work algorithm. Recently, Ethereum Classic has updated the blockchain for compatibility with the current version of Ethereum. 

For Ethereum to reach its all-time high of $1400, it still needs to grow 130%. We've seen altcoins do this price increase. XRP and Stellar have recently done something similar, but they're still far from their all-time highs. 

Ethereum Price Prediction for 2021

Traders are targeting the $800-$1000 range for next year. 

There still remains a bit of skepticism about Ethereum's self-sustained price increase. Others don't believe that it will continue to depend entirely on the Bitcoin price. On the charts, we can see that after the March collapse, Ether increased more than Bitcoin in percentage. Ethereum also has more red candles on its weekly chart, indicating more frequent corrections whenever Bitcoin price drops. 

The way Ethereum 2.0 transition is taking place, experts are still in doubt that this event will give a strong boost to the price of Vitalik's cryptocurrency. 

According to the upgrade specifications, the coins already deposited will be frozen there until the best time. In return, they will be issued similar tokens in the network with the PoS algorithm. Therefore, the new coins will be worth nothing if economic activities continue to occur in the current network. Thus, it will be impossible to take the original coins and sell them on the exchange. 

For the transition to happen, Ethereum has to make a global hard fork. Meaning, all future validators were informed about 5 to 7% annual returns. On the Beacon Chain of the 2.0 version, Ether holders with a minimum of 32 ETH can earn 16% annualized interest in their stake. Still, that number will still be 0 until tokens from the PoS network start trading on the exchange. But it's not going to happen soon because the zero phase doesn't imply a transaction sending feature. Although, that’s possible to happen in 2021, provided the Bitcoin successfully breaks through the current high of $23,000 and leads the cryptocurrency market to the moon. 

Conclusion 

How will Ethereum adopt the PoS algorithm? How does the adoption process affect Ethereum price prediction in the coming months? 

At Phase Zero, the system will have an initial test. Validators will be launched, and the staking management tool will be implemented, reinforcing a stricter fine system for miners. Ethereum staking will look nothing like it was before. You have to run the nodes. Offline validators will gain no reward and be penalized. If validators deliberately or accidentally attempt to damage the network, they can be fined. In other words, they can just burn a part of your Ethereum through staking. 

At Phase One, they will start to include sharding. There'll be 64 shards, so the Ethereum 2.0 blockchain will have 65 subnets -- along with the Beacon Chain, which will be the link between all the shards. There will also be another test phase during which economic activity won't take place. All transactions with real money will still take place in the current version of the network with classic mining. 

Phase Two implies a transition to a new mode. With operating validators and shards in the Ethereum 2.0 network, the Ethereum virtual machine will be launched, and applications and smart contracts will be transferred to it. It's not yet clear how it's going to be done; even the documentation is still under development. However, the developers hinted that the merger of the new Ethereum blockchains would begin during this phase. Therefore, mining with the PoS algorithm will be the priority, significantly reducing the reward for classical mining next year. 

At best, it will take at least two to three years for the developers to complete all three stages.

 

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