Ethereum has been getting a lot of attention recently, and for good reason.
Lately it has outpaced Bitcoin to the upside and, as of writing this, the setup in Ethereum daily chart is superior to that found on Bitcoin.
So, the question comes up, how high can Ethereum go?
To answer that question as best as possible, we can use available historical data of the ratio between Bitcoin and Ethereum.
The chart below shows the direct ratio between BTC and ETH. Think of this as a forex pair, where up on the chart indicates the market prefers ETH and down on the chart indicates BTC is preferred.
If this chart goes up, it indicates ETH outperformance relative to BTC.
If this chart goes down, it indicates BTC outperformance relative to ETH.
The all-time high on the chart is around .12, this number indicates that it takes about 12 Ethereum to buy 1 Bitcoin.
So, at the time of writing this Bitcoin is trading about $55,000, if the ratio of Bitcoin to Ethereum were back at the all-time high level we would take $55k/12 and get a rough estimate of where Ethereum could trade, around $4,580… and that is with no increase in the price of Bitcoin. That’s significantly higher than where it’s currently trading.
If we extrapolate a price of $100,000 for Bitcoin over time, and if the ratio were back to all time highs, that would mean that one Ethereum could be worth $8,300.
We can also look at altcoins the same way. An altcoin, for our purposes, is any coin that is not Bitcoin or Ethereum. The alts tend to move more with Ethereum and when ETH outperformance is in season, they tend to outperform both ETH and BTC.
The chart below shows a basket of altcoins paired against Bitcoin in the same fashion as we observed in the previous chart. Here the all-time high is about 100% higher than current prices, currently trading ~200, with an all-time high of 420.
This tells us that even the altcoins could double from here in value and, for those that enjoy an extra bit of risk, may offer even more outsized performance than ETH.
We have written a number of blogs which can be found at www.simplertrading.com/blog where you can read up on how Ethereum works and what makes it fundamentally different from a store of value such as Bitcoin. I invite you to check those out if you are unfamiliar.
The crypto market is still in its early stages, especially when it comes to platform coins such as ETH as the technology still has not been fully built and is growing rapidly in number of users and general adoption. There are a number of opportunities in the space for those that can see breadcrumbs. Bitcoin has the first mover advantage and is currently unrivaled in its store of value properties compared to other cryptos. But, as we have seen above, if the market begins to value the technological growth of the altcoin space, there is a lot of runway into the future.