Ethereum | Fundamental Analysis

Many digital tokens have fallen 90% or more this year. Even the largest cryptocurrencies have not been spared from this collapse: the price of Ethereum has fallen by almost 70% this year.

But there still seems to be hope in the hearts of some crypto investors. They know that winter doesn't last forever, and they believe a new season could bring a powerful rebound for the strongest cryptocurrencies. Could Ethereum reach $10,000 in 2023?

Let's face it right away, Ethereum has a very steep climb to even come close to the $10,000 mark. Doing so in just 12 months seems nearly impossible.

The current price of Ether tokens is hovering around $1,200. Ethereum peaked at just over $4,800 in early November 2021. That historic high is still short of $10,000.

However, Ethereum is now almost 75% below its all-time high. This means that it will have to grow almost four times to get back to its previous level. To reach the $10,000 mark, Ethereum would have to jump more than 700%.

But nearly impossible is not the same as impossible. In the past, Ethereum has actually achieved growth of well over 700%. In 2017, for example, the price of the token soared nearly 9,300%. The year before that, Ethereum was up 784%.

Are the current dynamics of cryptocurrencies the same as they were during Ethereum's previous meteoric rise? Obviously not. But we can at least roughly guess what it will take for Ethereum to reach the $10,000 mark next year.

Probably the most important thing that needs to happen is a return on investor confidence. And that confidence needs to be widespread to create the conditions necessary for Ethereum to truly take off.

For investor confidence to return quickly, it is absolutely essential that the U.S. avoid a recession in 2023. However, that alone will not be enough. Rather, we will need to see clear signs that inflation is under control. Ideally, the Federal Reserve will even lower interest rates.

A significant improvement in the overall environment, boosting investor confidence, is key. Ethereum will also almost certainly need good news to have a chance of reaching $10,000.

One potential source of such good news is the ongoing modernization of the blockchain platform. This year, Ethereum completed its transition to a proof-of-stake model by completing merging its main net with the Beacon chain. This move reduced the power consumption of the blockchain by almost 99.95%.

The next important step will be the move to sharding, which will greatly improve Ethereum's scalability and power. This should also pave the way for significantly lower transaction fees.

Currently, the sharding upgrade is expected to happen in 2023 and 2024. Any delays would make it much more difficult for Ethereum to grow. But if the update goes smoothly and ahead of schedule, it could be a key catalyst for the cryptocurrency.

Is it possible that Ethereum will reach the $10,000 mark in 2023? Yes. Is it likely? No.

The prospects of avoiding a recession are not great right now. Even if it happens, there is no guarantee that inflation will fall enough that the Fed will stop raising rates. The likelihood of interest rates falling next year seems particularly low. Betting that Ethereum's move to sharding will happen sooner than planned is also not a good idea.

Objectively, there are two scenarios that are much more likely for 2023 than Ethereum reaching the $10,000 mark. The first is that the cryptocurrency will continue to move in the same direction as it has for most of the last three months. The second option is that Ethereum is experiencing a strong rebound that does not even reach its previous historical high.

It is impossible to predict how long the current crypto-winter will last. But when the thaw kicks in, Ethereum should be one of the big winners - even if it doesn't come close to the $10,000 mark.