In previous years, the cryptocurrency market has been constantly flooded with new assets and with each new bull run we have projects that no one expected to gain notoriety and their prices increased exponentially. In the first bull market (which I will consider in 2012 given that the graphical information on the periods prior to this one is scarcer) we had Ethereum appearing to revolutionize this world and, as some consider, bring fame, presenting the proposal of cryptocurrencies for the broader audience.
The second bull market that was in 2016/17 brought notoriety to projects that solved problems presented by bitcoin so we saw projects like Raiblocks / NANO gaining an audience and valuing themselves in an absurd way where in a few weeks it went from U $ 2 to something close to U $ 40, at that time the market was inflated with the high fees charged and the transactions took a long time, NANO's proposal was a cryptocurrency with global usability where there are no fees because each user has their own blockchain that communicates with the other (if you want learn more about NANO click here) in addition to removing the centralized miners that inflate the currency from circulation.
In this third and current bull market, I believe that we would see an improvement of projects that already exist. Ethereum is already a consolidated project, being in second place with the largest market capitalization currently according to numerous quotation sites, however in 2019 it experienced several congestion problems in the network and companies migrating to another blockchain (then you ask me: why is this good?), this becomes something positive for alerting developers to these important factors and as a result we see Ethereum 2.0.
This is a very ambitious plan, which plans to migrate Ethereum to the proof of stake mechanism. In the process, the set of measures will make the platform a thousand times more scalable, in addition to making the blockchain safer, faster and making it consume less energy. For those who do not know Proof-of-Stake is a type of consensus, where the creator of a block on the blockchain is chosen randomly or according to its "stake" (there are other several ways to do this). The stake is the portion of resources that you put into play when trying to create a block. For example, I place 300 ETHs on my stake and if for some reason I try to forge a block, I lose my 300 ETHs.
This consensus method has the advantage of not needing expensive equipment for the creation and validation of blocks and such a system rewards the availability of validators, to improve the performance of the network. Validators will be rewarded with network fees and a prize for being a validator. The system is designed to reward 2% to 5% per year of the 32 ETHs placed at stake.
In fact, a study by Consensys showed an average net return of ~ 2.59% per year for validators using their own hardware and -17.82% for those using cloud services depending on the variables (price, network usage and award for validators).
The dynamics about Ethereum 2.0 incentives are still being discussed and as we can see in Consensys' analysis, long-term returns will also depend on Ether's network conditions and price.
Initially it is interesting to remember that Ethereum was already worth U $ 1,400 and is currently quoted at U $ 280. Making a hook and taking the bitcoin chart we have the following information
The year of 2019 for bitcoin was marked by the resumption of the bull market, in that period it closed to be quoted at $ 13,800 and fell again. I believe that ethereum did not follow the same pattern despite the increase due to network congestion and company migration factors like the one mentioned above, however now with the problems moving towards being solved we can see a similar pattern.
As the changes are starting this year, pricing tends to happen in 2020 too (as we are already seeing). So let's say that we are entering that first wave of appreciation as it happened in bitcoin and because of the encouraging news we take half of the historical top, given the current heart we are talking about more than 100% appreciation. However, I believe that this year we will have an even higher increase and I will use the Elliot waves to support this theory:
Tracing the retraction we can see that the correction was finished in 0.786 as it happens in 36% of the corrections of wave 2, we can notice that it was quite deep giving us the margin to believe that the correction of wave 4 will be something more lateralized.
Now using the fibonacci extension tool we can reach some possible points for the completion of this wave 3. Most likely it would be close to the point 2,618 of extension since historically waves 3 of the ethereum tend to be extended, with this we also have a point of conclusion with that top formed in May 2018.
It would even be possible to continue projecting waves 4 and 5 to continue our study, but as I believe that wave 3 will be completed near the end of the year, it is more interesting to finish here.
To conclude, I believe that Ethereum's potential goes far beyond that mentioned in this study and that there are other projects that will have an even greater appreciation than that mentioned, however it is interesting to bring this study because the project is already consolidated in the market, even after fall from U $ 1,400 to U $ 80 it still remained among the 3 biggest capitalizations showing the reliability and usability that the project acquired in these years of existence (something that does not happen with altcoins that come out of nowhere - there is the MATIC that dropped 40% after a false news on twitter as an example of this), it is clear that the volatility when dealing with cryptocurrencies is always very high, just like the risk, but putting a large percentage of this project in your portfolio gives you more security to risk more and position yourself in smaller projects.
Thank you for reading :D