For some investors, Ethereum has become a byword for innovation. That’s because, as well as a cryptocurrency (Ether), Ethereum is a platform on which individuals can build concurrent projects within the digital asset space, potentially giving rise to new, decentralised financial applications.

Ethereum is second only to Bitcoin (BTC) in terms of market capitalisation, coming in at £372 billion compared with Bitcoin’s £1.1 trillion market cap. As of 18 March 2024, one Bitcoin will set you back by around £53,800 while you will need roughly £2,820 to buy Ether.

Some investors may regard Ethereum as a relative ‘safe-haven’ crypto asset like BTC and – with a spot Ethereum ETF awaiting approval and major network upgrades in the pipeline – some investors are tipping 2024 to be the year that Ethereum emerges from Bitcoin’s shadow. Here’s a closer look at Ethereum’s journey so far and where it may be headed in the future.

Related: Bitcoin Price Prediction: Boom or Bust?

Ethereum’s price history

Since its inception in 2015, Ethereum (ETH) has arguably lived up to the famous investor adage of “high risk, high reward”. But Ethereum has also faced some highly volatile and tumultuous times. Its price plunged more than 70% in the second half of 2016 and then a monumental 94% drop in 2018. There was another significant drop of 80% in the first half of 2022.

Ethereum also experienced a stratospheric increase of 2,500% in the first half of 2016. Then, in 2017, it increased by a staggering 20,000%. And, when the bottom price of £10 (in 2016) is compared to the top of £3,460 (in 2021) it has surged 34,500%. However, this all evidences just how volatile cryptocurrency can be.

How might Ethereum perform in 2024?

While it is impossible to accurately predict the performance of any digital asset due to the variety of factors that can affect the price, there are certain events that could potentially impact Ethereum’s price.

The birth of staking via EigenLayer, as well as two major network upgrades – Dencun in March and Petra sometime in the fourth quarter of this year – along with spot ETH ETFs going live as early as May, could have major effects on Ether’s price.

The global macroeconomic outlook also plays a role. Over the past few years, the post-pandemic world has grappled with high inflation levels and increasing interest rates from central banks. This put a dampener on risk assets, such as equities and crypto, as many investors sought out safer returns in other markets such as bonds.

However, if inflation falls and rate cuts are on the cards for 2024, this could lead to increased capital inflows to crypto.

What might the future hold for Ethereum?

The bull case

Some speculators believe there are a number of scenarios that could potentially fuel an increase in Ethereum’s price in the future. One of these is a new development known as “restaking”, in which users stake the same tokens on the central blockchain and other protocols, thereby securing multiple networks at the same time.

Anticipation surrounding restaking has been high among many investors, with a raft of new restaking protocols emerging over the past few months and billions worth of Ethereum deposited. 

Just as the spot BTC ETF applications created a positive narrative for Bitcoin, driving its price upwards into the approval date, some believe the same situation could play out for Ethereum. The earliest date of spot ETF approval is expected by 23 May 2024, but it could happen any time this year.

There are also a host of significant network upgrades scheduled for 2024, which could positively impact Ethereum’s price. For example, Dencun (the newest Ethereum network upgrade) has brought with it improvements which include cheaper transaction fees. 

This is especially significant because a large amount of transaction activity has shifted from Ethereum onto Ethereum-based Layer-2 networks over the past 12 months. These Layer-2 networks, which are essentially blockchains that exist on top of Ethereum, leverage Ethereum’s decentralisation and security while offering faster and cheaper transactions for users.

The Dencun upgrade makes these networks more economical, dropping transaction fees to a few pence or potentially less in some cases.

Petra, another Ethereum upgrade set to go live by the end of this year, is still in development. The main improvement delivered by Petra is expected to be the hardening of Ethereum’s censorship-resistance properties. This ensures that all users have equal access to the network’s services, safeguarding the platform’s decentralised and open format for digital transactions and applications.

Finally, Ethereum’s fee-burning mechanism, introduced in The Merge upgrade, continues to operate, reducing the overall supply of Ethereum.

The bear case

However, although some are optimistic about Ethereum’s potential, many others acknowledge the ever-present risk of downturns. Broader market conditions or increased regulatory scrutiny could slow Ether down, for example. And, as with any cryptocurrency, Ethereum is inherently volatile and comes with no guarantees that investors will make a profit or even get back what they put in.

Naturally, whether Ethereum, or cryptocurrencies more broadly, are a good investment will depend on each individual’s financial situation, risk tolerance and goals.