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Even though its price fell almost 90 percent, Ethereum was still pretty vivacious in 2018 as it has seen greater adoption, regulatory certainty, and institutional interest indicating that Ethereum is very far from dead. 2019 looks promising as well.
There’s no doubt the 2018 bear market has been rough, but some cryptocurrency traders have been taking advantage. Actively trading whales have accumulated more Ethereum this year than at any other time in its history.
Since the beginning of the year, it has lost over 92% of its value but has recovered and at the time of writing, it is traded for $125.69 with a market cap of $13.1 billion.
For now, it seems that ETH is still in its bullish trend on the long-term outlook. Last week, the cryptocurrency found its support at the demand level of $79. A bullish engulfing candle formed at this demand level made the bulls succeed in breaking up the former supply level of $109 and the coin rallied to the north and the last week target was met as predicted. The demand level of $79 serves as a turning point for the coin. Several barriers were broken to the upside including the dynamic support and resistance.
The bulls have taken over the ETH market as the bullish momentum increases with more strong bullish candles coming up and placed the coin above the 50-day EMA while the 21-day EMA is below which indicates that bullish momentum is increasing. The coin reached the high of $164 where the further increase was rejected and Ethereum price retraced to the broken level.
Also, last week, for the first time ever, (or after the hard fork), the price of Ether has surpassed that of Bitcoin Cash. Among all other crashes in crypto world, this is now the latest negative milestone in a few weeks for the world’s fourth-largest cryptocurrency by market capitalization.
When speculators see a falling price it is difficult to sit back and admire everything that the Ethereum network is accomplishing, and it’s even harder to look at Ethereum with an open mind when the mainstream media seems to be focusing their coverage around the price decline or Consensys layoffs.
Ethereum has seen greater adoption in 2018, regulatory certainty, and institutional interest this year indicating that the coin is far from dead. Despite it seems no one believes that Ethereum will survive, there are some facts that may prove skeptics wrong.
Increased Adoption Meaning Higher Transaction Volume
The Ethereum blockchain has seen increased active addresses and on-chain transaction volume in 2018, which are both good proxies to measure adoption. The number of unique Ethereum addresses recently broke the 50 million mark, and the rate of unique address creation has increased in 2018 as well.
According to Consensys, a newly created address was used, on average, for 35.45 days before going inactive, which means that the length of use this year is up over 3x, from an average of 11.25 days in 2017. Starting in March 2018, the network stabilized at around 50 million ETH transacted per month, and has fluctuated nominally month-to-month since.
Bitcoin wasn’t the only cryptocurrency to garner attention from the world of traditional finance. Fidelity Investments is launching an institutional platform for Bitcoin and Ethereum and the investment company currently provides financial services for $7.2 trillion in assets.
While CBOE is expected to adopt Ethereum in 2019, Coinbase has already adopted ERC-20 tokens with almost gay abandon over the last couple of months.
Approximately 200k smart contracts were created and deployed in June since the start of 2018, and that number has grown to more than 1 million in October and nearly 1.8 million deployed in 2018 to date. This is an increase of nearly 25% year over year. The number of successful calls to smart contracts has remained consistent at 1.2 million per day when compared to 2017.
Interest in the Ethereum community is growing in general as well. Reddit’s community has grown to more than twice its 2017 size, from 176k in early December 2017 to 418k in early December 2018, and several telegram communities have more than doubled their users as well.
Without fail, the Ethereum blockchain remains the most robust smart contract platform in existence. Of the top 100 tokens by market cap, 96% are built off Ethereum. Of the top 1000 tokens, 89% are built off Ethereum
It is Not Defined As a Security
In June, Director of Corporate Finance at the U.S. Securities and Exchange Commission, William Hinman made remarks indicating that he believed ETH is not a security.
This gave rise to the notion that projects could start out as securities, and become decentralized enough to avoid security status despite having an ICO and a pre-mine.
Two projects to highlight that launched on Ethereum this year are Maker’s Dai and Augur. Dai, a crypto-backed stablecoin, grew to hold over 1.6 million ETH in a year and has secured over 5000 collateralized debt positions, and maintained its peg during a 94% collapse in the price of ether. Dai was able to hold its peg to $1 while Ethereum’s price crashed down below $90, even after some CDPs were opened at ETH prices of over $1300 in January.
Augur launched in July, and since then approximately 15k ETH has been traded on Augur and millions of dollars have been staked on several markets.
Money Raised In Crowd Sales
Less than 6 months into 2018, Ethereum surpassed the amount of money it helped raised through ICOs in 2017 and set records for the largest ICOs to date; indicating that projects raising money were not migrating to competitor platforms just yet.
In 2017, venture capital firms invested $1 billion in blockchain companies and that number increased 4x in 2018, which is probably a better proxy for the strength of what projects are building than retail ICO investment is.
The investment sizes were bigger as well – the medium investment increased from $1.5 million to $2.5 million from 2017 to 2018.
In September, Andreessen Horowitz has shown that it is particularly bullish on Ethereum. The firm raised $300 million this past summer for its first-ever fund focused on crypto and invested $15 million in MakerDAO.
BitMEX CEO: Ethereum “Will Quickly Test $200”
In a recent interview, BitMEX CEO Arthur Hayes claimed initial coin offerings (ICOs) would return over the next 18 months, and that low Ethereum (ETH) prices were currently correlated with a dead ICO market.
“Once there are new issues, then Ether will rebound aggressively. When the ICO market returns, Ether will quickly test $200. The timing of the ICO rebirth is 12 to 18 months out.”
Ethereum prospects in 2019 are also enhanced by the fact that it already has an established network. With its fundamentals getting better, and its price at massive lows in 2018, Ethereum could draw in more investments than any other cryptocurrency in 2019. It is already showing signs of massive growth, if its price action in the last 2 weeks is anything to go by.
Ethereum will also be backed by the fact that, with the ability to scale efficiently, it could consolidate the platform blockchains space, and kill off the competition.
Even though Ethereum still hasn’t moved to Proof of Stake, Ethereum developers have started focusing their efforts on more focused sharding initiatives. The long-awaited Constantinople mainnet hard fork is scheduled for block #7080000, estimated around the 16th of January in 2019.
It is, however, expected that Ethereum will show even better results after a long-awaited Constantinople upgrade that will happen quite soon. Constantinople fork that is scheduled for January 2019 is said to be the largest upgrade for the network. According to a well-known cryptocurrency expert Alex Krüger, Constantinople upgrade could greatly affect ETH.
1/ #Ethereum's Constantinople fork is coming on block 7080000, around January 16, 2019. Constantinople will reduce the block rewards from 3 to 2, decreasing new $ETH supply accordingly.
On the long run, this is decidedly bullish. https://t.co/4bbgAHMz7Z
— Alex Krüger (@krugermacro) December 24, 2018
Krüger added that if the ETH price after the upgrade is nearly $155, only those professional miners who pay for electricity above $0.075 will operate at a loss.
Be it as it may, Ethereum may have its flaws, but amidst a massive price decline we need to step back and see that the project is making moves, and that they have a different target market for dApp development than more centralized blockchains.
Ethereum has been increasing its user base, supporting projects to launch on top of it, and has remained the preferred decentralized smart contract platform in 2018.