- Ethereum project underwent several improvements in 2019.
- 2020 may be crucial for platform development.
- ETH/USD price has a good chance to stage a recovery in 2020.
A lot of exciting developments are in store for the Ethereum project in 2020: the team is about to start a transition to Ethereum 2.0, the last final update for the second-largest cryptocurrency platform in the world, while CFTC is ready to approve ETH futures. How will all these events pan out for ETH, and what's going to move the price during the year? Read on to know the answers.
Ethereum is one of the largest cryptocurrency platforms, often referred to as the world's computer. With the current market value of $15.7 billion, it is second only to Bitcoin. Ethereum was proposed by a Russian-Canadian developer Vitalik Buterin in 2013. In November 2015, the platform went live after the team raised over $2.3 billion via a highly successful crowd sale. The platform is used to create decentralized applications and online services based on smart contracts technology. As an open-source platform, Ethereum allows startups and companies to build their blockchains, issue digital tokens and raise financing.
Key Ethereum news in 2019: A year in review
Ethereum ecosystem saw several improvements during 2019, that ensured the constant development and growth of the platform. A steady flow of network updates and increased collaboration between the developers made the whole system stronger and attracted new projects to the platform.
According to the year-end roundup published by Consensus, over 520 decentralized applications were built and over 20 million addresses were created on the platform during the year. Currently, there are over 8500 nodes in the network and over 4 million active Ethereum addresses, while Ethereum miners received over 4.7 million ETH as block rewards.
The ecosystem lived through three significant upgrades (Constantinople, Petersburg and Istanbul) and launched Ethereum 2.0 in the testnet.
Looking forward, we have several essential milestones scheduled for 2020. First, after several postponements, the team is ready to start rolling out the Serenity update (also known as Ethereum 2.0). This is the final destination for the Ethereum blockchain that will herald the transition to the proof-of-stake concept. The phase 0 of Serenity will be deployed in the first quarter of 2020; however, the full roll-out may take at least two or three years due to the complexity of tasks faced by the developers. Notably, Serenity will be deployed incrementally, which means that the current version of Ethereum 1 will stay operational all the time.
The US regulators hinted that they might approve a new cryptocurrency-based derivative product backed by Ethereum somewhere in 2020. Namely, the Commodities and Futures Trading Commission (CFTC) is ready to give a go to Ethereum futures, but there is an issue: no one has filed a relevant application as of yet.
Futures contracts are an agreement between buyer and seller to conclude a deal on pre-set conditions. They can choose the strike price and the settlement date of the project; the rest is done by the market. Considering that the US regulators classified Ethereum as a commodity, companies should not have any issues with launching Ethereum-based futures in the US.
However, in Bitcoin's history is any guide; this development may negatively affect the Ethereum price. Some experts regard the futures as a mechanism of containment. Moreover, the launch of crypto futures may have a political context ahead of Presidential elections in the US in 2020.
Basically, the authorities try to lure the investors to the regulated exchanges where they can trade cryptocurrency derivatives with a margin under strict oversight. While the new products may attract new players to the market, it will do little to support the price.
ETH/USD price analysis: Where from here?
After a roller-coaster 2017 and 2018 that saw Ethereum price increase from under $10 to $1425 and subsequent collapse to $80, the year of 2019 brought so much needed breathing spell. The coin started the year at $130.56 and hit the highest level of $363.25 in June. However, increased bearish sentiments in the second half of the year pushed in back towards $132.00 by the time of writing. It means that the coin is finishing the year mostly unchanged.
From the technical point of view, a sustainable move below $200-$180 area worsened Ethereum's mid-term outlook. This pivotal zone is reinforced by a confluence of strong technical indicators, including SMA50 (Simple Moving Average) weekly, the middle line of the weekly Bollinger Band and 61.8% Fibo retracement for the upside move from 2018 low of $80.00 to June 2019 high of $365.25.
Since the end of September, the market made numerous attempts to reclaim the above-said area, but eventually resumed the downside, broke below the channel support of $155.00 and touched 2019 low of $129.71 on December 16. Now this area serves as a resistance that has survived several breakthrough attempts.
ETH/USD: weekly chart
Ethereum forecast: Bearish and bullish scenarios
Our bear case scenario implies that a failure to reclaim $155.00-160.00 area bodes ill for Ethereum bulls and increases the possibility of a further sell-off towards $130.00 and the recent low of $129.71. This move will negate all the gains of 2019 and opens up the way to $100.00 within 2020. This will bring 2018 low of $80.00 back into focus and potentially trigger the self-sustained doomsday prophecy for ETH.
Considering the downward-looking RSI ( Relative Strength Index both on weekly and daily charts) implies the further sell-off looks. However, the indicator stays close to oversold levels, which means the market will be looking for the chance to initiate an upward correction. In this case, we may see another assault at $155.00 sooner rather than later.
Meanwhile, we will need to see a sustainable move above $185.00-$200.00 area for the bull case scenario to start unfolding. Once it is broken, the upside trend may gain traction with the next focus on $232.70 (SMA200 weekly) and $253.50 (38.2% Fibo retracement for the above-said move). However, the trend reversal will be confirmed only after the coin reclaims 2019 high at $365.25. This area is reinforced by SMA100 weekly.
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