Ethereum is comfortably positioned as the world’s second most valuable cryptocurrency, and it looks like ETH will only solidify its spot over time. Of course, the most important crypto event in the next year will be Bitcoin halving, and it’s expected to have a significant impact on the markets for all cryptocurrencies, including Ethereum.
In this article, we’ll share our Ethereum price prediction after the halving, and explore whether Ethereum is likely to be a good long-term investment or not. First, let’s take a look at how Ethereum has performed during previous Bitcoin halvings.
Key takeaways:
- Historical trends show Ethereum's varied performance around Bitcoin halvings, with notable differences between the second and third halvings.
- Speculating on Ethereum's price after the fourth Bitcoin halving in 2024 remains uncertain. While Bitcoin halvings generally create a bullish sentiment, their specific impact on Ethereum's price is unpredictable.
- Our projections suggest a potential price dip for Ethereum to around $3,900 by April 2024, 25% below its all-time high but a significant 75% rise from its current value.
- Longer-term forecasts indicate a surge to over $6,300 by late July 2024, followed by a dip to $3,700 before rallying to peak above $7,300 in March 2025.
- Ethereum's long-term potential as an investment looks promising due to the Ethereum triple halving concept. Factors such as reduced ETH issuance, EIP-1559's ETH burning, and staking contribute to deflationary pressure on its supply.
How has Ethereum performed before and after Bitcoin halvings?
First off, we need to keep in mind that Ethereum didn’t even exist yet when the first Bitcoin halving happened back in 2012. ETH has only been around for two Bitcoin halvings, so the sample size of Ethereum’s price action before and after Bitcoin halvings is extremely small.
| Date | ETH Price 1M before Halv. | ETH Price at Halv. | ETH Price 1M after Halv. | ETH Price 3M after Halv. | |
|---|---|---|---|---|---|
| 2nd BTC Halving | Jul 9, 2016 | $14.7 | $11 | $11.7 (+6.3%) | $11.2 (+1.8%) |
| 3rd BTC Halving | May 11, 2020 | $160 | $211 | $249 (+18%) | $398 (+88.6%) |
Brackets show ETH performance relative to the BTC price at the time of each respective halving.
As we can see, the ETH price action around Bitcoin halvings has been quite different if we compare ETH’s performance amidst the second Bitcoin halving and its performance amidst the third Bitcoin halving.
The Ether market was relatively quiet during the second Bitcoin halving, which happened in July 2016. In fact, ETH saw a 25% price decline in the month leading up to the second Bitcoin halving. Following the halving, it showed a modest recovery, although ETH’s price three months after the halving was only about 1.8% higher than it was at the time of the halving.
The situation amidst the third BTC halving in May 2020 was much more favorable for Ethereum. ETH increased by 31.8% in the month leading up to the third halving. Three months after the halving, Ether was up a whopping 88.6% compared to its price at the time of the halving.
Based on this, it’s difficult to tell what will happen to the Ethereum price as the fourth Bitcoin halving approaches. Generally, Bitcoin halvings are seen as bullish events and improve the overall sentiment in the cryptocurrency market. So, it might be worth considering increasing your ETH stack a bit before the halving.
What is the Ethereum price prediction after the Bitcoin halving in 2024-2025?
Currently, most estimates are suggesting that we should expect the next Bitcoin halving to happen in mid-April 2024. At the moment, the Ethereum price prediction on CoinCodex is forecasting Ethereum to trade at roughly $3,660 on April 15, 2024. This would be about -24.7% below Ethereum’s current all-time high but a 24.9% increase compared to the Ethereum price at the time of writing.
As far as the Ethereum price prediction for 2024 and 2025 is concerned, the forecast is expecting the ETH price to accelerate sharply soon after the Bitcoin halving, hitting new all-time highs just above $6,600in September of 2024.
The prediction is expecting that ETH will then drop and find support at roughly $4,070, before gathering momentum for a new rally that’s forecasted to reach its peak above $7,000 in April 2025.
Is Ethereum a good long-term buy?
Ethereum appears to be quite promising as a long-term buy thanks to a concept known as the Ethereum triple halving. Even though the Ethereum protocol does not have a halving mechanism, it does have features that provide deflationary pressure to its supply:
- Reduced ETH issuance under Proof-of-Stake consensus
- ETH burning via the EIP-1559 upgrade
- Ethereum staking lowers the amount of ETH that is effectively in circulation
These three factors have already contributed to reducing the ETH supply, and will continue to make ETH deflationary so long as demand for transacting on the Ethereum market remains high. Based on Ethereum’s current trajectory and status as the undisputed king of the smart contracts space, the future is looking bright for ETH holders.
Ever since Ethereum moved from Proof-of-Work to Proof-of-Stake, ETH has turned deflationary. Since the transition to Proof-of-Stake, the ETH supply has been dropping by 0.23% per year on average. In that time period, 1.08 million ETH has been issued, while 1.49 million coins have been burned.
ETH issuance and burns since the Ethereum network transitioned to Proof-of-Stake. Image source: ultrasound.money
However, it's important to understand that it's not guaranteed that ETH will remain deflationary forever. This is because theEIP-1559 mechanism burns the base ETH transaction fees paid by users. This means that the amount of ETH that's being burned depends on the demand for transactions on the Ethereum network. If demand for transactions saw a significant drop, it's possible that ETH could become inflationary again at some point in the future.
Another way to get a unique perspective on the Ethereum price from a long-term perspective is the Ethereum rainbow chart. This chart uses a concept known as logarithmic regression and features 9 different colored bands. Depending on which band the Ethereum price currently resides in, it can be interpreted as signaling overbought, underbought, or neutral conditions.
In the video below, you can learn more about the Ethereum rainbow chart and how you can use it to gauge the current conditions in the Ethereum market, as well as its long-term prospects.
The possibility of an Ethereum ETF
In January of 2024, the first spot Bitcoin ETFs were approved by securities regulator Securities and Exchange Commission (SEC) to enter the U.S. market. Before that, the only Bitcoin ETFs which were allowed were Bitcoin futures ETFs, which held Bitcoin futures contract and not actual Bitcoin.
The logical next step for crypto investing products in the U.S. seem to be ETFs that would allow investor to easily gain access to Ethereum, which is the second largest crypto asset by market capitalization. Several asset management companiesincluding the likes of Franklin Templeton and VanEck have already applied to list spot Ethereum ETFs, and BlackRock CEO Larry Fink has said that he sees value in an Ethereum ETF.
To be sure, it might take a long time for the SEC to approve spot Ethereum ETFs – after all, getting the first spot Bitcoin ETFs was a multi-year effort even though several large asset management firms were pushing to get these products on the market. Still, the narrative that an Ethereum ETF is likely to come in the future will likely serve as a tailwind for ETH.
The Dencun upgrade
Another bullish factor for Ethereum is the Dencun upgrade, which will introduce several EIPs (Ethereum Improvement Proposals). The most notable EIP that will be included in the Dencun upgrade isEIP-4844, also dubbed "Proto-Danksharding".
EIP-4844 aimsto significantly improve performance for applications that depend on the use of extensive datasets, such as decentralized applications (dApps) and layer-2 scaling solutions developed on Ethereum. By dividing tasks between the consensus and "database" layers, the upgrade is an importantstep towards the ultimate goal of completely fragmenting the Ethereum blockchain into shards to achieve massive scalability.
The Ethereum Dencun upgrade will also introduce other EIPs such as EIP-6780, EIP-5656 and EIP-1153.
The bottom line
So far, there hasn’t been a clear trend of how Ethereum tends to perform in anticipation and immediate aftermath of Bitcoin halvings. Of course, Ethereum has only been around for two Bitcoin halvings, so the historical data is very limited. Overall, it might be a good idea to purchase some ETH as the halving approaches since the crypto markets tend to be optimistic in the lead-up to Bitcoin halvings.
ETH appears to be positioned well over the long term, thanks to its tokenomics. After transitioning to Proof-of-Stake, the protocol needs to issue much fewer new ETH coins, and EIP-1559 is constantly burning the ETH that’s being spent to pay for transaction fees. If you’re looking to learn more on this subject, check out our article exploring the Ethereum triple halving.
