Can Ethereum Reach $1,000?

As Bitcoin rockets to new highs almost daily, it begs the question, "Can Ethereum reach $1,000?"

After the No. 2 cryptocurrency hit an all-time high of $522 on Nov. 29, it retreated, and today (Monday) is trading at about $470. Still, that's a gain of more than 5,700% since Jan. 1 - well above Bitcoin's gains of 1,600%.

Can Ethereum reach $1,000And yet, monster gains like that tend to leave investors wondering if there's any gas left in the tank.

But if 2017 has taught us anything, it's that you can never assume a cryptocurrency has peaked.

Both Bitcoin and Ethereum have far exceeded price predictions made at the start of the year, as have dozens of other cryptocurrencies.

While many analysts have been forced to keep revising their Bitcoin and Ethereum price forecasts this year, one charting tool used by technical analysts has proven extremely useful at estimating cryptocurrency price movements.

And it's telling us that an Ethereum price of $1,000 is definitely on the horizon...

This Chart Says We'll See Ethereum Reach $1,000 in 2018

I'm talking about Fibonacci charts. J.C. Parets, founder and president of All Star Charts, has been making Fibonacci charts for Bitcoin since last year. And what he saw unfold through 2017 amazed him.

"Talk about Fibonacci - I mean, dude, does it get any cleaner than this?" Parets said during an Oct. 13 presentation at Stocktwits' annual Stocktoberfest West conference. "I mean, guys, this is like to the penny."

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Now Parets charts several cryptocurrencies, including Litecoin, Bitcoin Cash, Iota, Dash, Ripple - and, of course, Ethereum.

Here's what his most recent Ethereum Fibonacci chart looks like:

ethereum prices

A Fibonocci chart typically starts with a major retracement. For Ethereum, Parets used the 67% drop from mid-June to mid-July. Fibonacci levels start with the price regaining the previous peak - in Ethereum's case, $412.21.

After that, you apply the "Golden Ratio" of 1.618% to get the next level. For the Ethereum price, that's $582.83, well above the all-time high of $521.12.

The next level (calculated by adding the previous two percentages together: 100% plus 161.8%) is $858.92 - a 261.8% extension from the July low of $136.12. The level after that is a 423.6% extension, which will put the price of Ethereum at $1,305.64.

That may seem a stretch from Ethereum's current price. But remember that Ethereum started 2017 at just $8. And Bitcoin - now over $16,000 - started the year under $1,000.

While Fibonacci charts don't predict when an investment will reach the next level, Ethereum's track record suggests we'll see it reach the second extension ($858.92) at minimum and very possibly the third.

After all, Bitcoin blew through five Fibonacci extensions in about seven months.

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So the real question isn't can Ethereum reach $1,000, but when Ethereum reaches $1,000.

There are several reasons to believe Ethereum will have a lot of price momentum behind it in 2018.

These catalysts explain why the price of Ethereum will check off one Fibonacci extension after another...

What Will Drive the Ethereum Price Higher in 2018

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Ethereum quickly established itself as a top cryptocurrency almost since its debut in 2015. Only Bitcoin is bigger and better known.

Ethereum's differences from Bitcoin have made it attractive to businesses interested in adopting blockchain technology - the digital ledger system most cryptocurrencies are built upon.

More than 200 businesses, including Cisco Systems Inc. (Nasdaq: CSCO), JPMorgan Chase & Co. (NYSE: JPM), Intel Corp. (Nasdaq: INTC), and Toyota Motor Corp. (NYSE ADR: TM) are members of the Enterprise Ethereum Alliance, which aims to develop and deploy business uses for the Ethereum network.

Ethereum has also become the foundation of initial coin offerings (ICOs). Most new cryptocurrencies base their tokens on the Ethereum standard, a constant source of added value.

Ethereum is also a global computing platform, designed to run "dapps" (decentralized applications).

Last week, we witnessed the first dapp to become a runaway hit - CryptoKitties, a game centered on collecting and breeding digital cats. It's a silly dapp, but it demonstrates the power and potential of the dapp concept.

With these tailwinds behind it, Ethereum figures to benefit from a rotation of vast wealth into cryptocurrencies over the next year and beyond.

"We currently have $200 trillion in the world tied up in stocks, cash, bonds, and gold - that is $25,000 for every man, woman and child... all four of those being overvalued," Ronnie Moas, head of Standpoint Research, said in a recent note to clients. "If 2% of that $200 trillion ends up in crypto, we end up with a $4 trillion valuation for the space - that today is valued at $400 billion."

Right now, Ethereum comprises about 10% of the total value of all cryptocurrencies. If that holds true going forward, and Moas is right, the price of Ethereum ultimately would rise to $4,140 - nearly nine times its current price.

But for most of 2017 (before Bitcoin's recent explosion), Ethereum made up about 15% of the total value of all cryptos. That proportion would push the Ethereum price to $6,274 - more than 13 times the current price.

And it makes a target of $1,000 look downright low.

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About the Author

David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.

Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.

Dave has a BA in English and Mass Communications from Loyola University Maryland.

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