FxWirePro Poll: Ethereum will regain power only if demand recovers, but Goldman expects further decline

Ethereum is forecast to regain ground and erase all of its losses made this year by end-2018 only if investors’ demand recovers over the coming year, but Goldman Sachs expects further decline, an FxWirePro poll showed.

So far this year, the second most popular cryptocurrency, fell close to 40 percent after investors turned overly pessimistic regarding the digital currency’s performance, coupled with a heavy sell-off in Bitcoin.

Outlook for the cryptocurrencies around the world looks bright as an official of the Iranian central bank hinted that the cryptocurrency ban could be lifted in September. At the same time, top leadership in Israel has long considered launching a state-backed virtual currency, which could further impart gains to Ethereum.

According to the median forecast of nearly a dozen research organizations and institutional investors, taken August 20-28, Ethereum prices are seen reaching $833.3845 by December this year. While 4 predicted ETH/USD to remain in the range of $135-171, 2 forecast it to surge to $2,500. Other forecasts are seen in the range of $700-1,500.

"The market remains under pressure in 2018, extending its run of intense declines to fresh 2018 lows. The next level of major support comes in around $160, which goes back to the low from July 2017. Daily studies are however extended, which could warn of a corrective bounce ahead, though it would take a break back above $370 to officially take the pressure off the downside," noted LMAX Exchange.

"We’ve been seeing quite a bit of weakness in the price of Ether in 2018 and there is still legitimate risk for deeper setbacks, given technical hurdles within the Ethereum protocol, ongoing regulatory oversight and a global macro backdrop exposing risk correlated projects on the Ethereum blockchain. Monetary policy normalisation and an anticipated reduction in global risk appetite is placing a tremendous strain on ERC20 projects that have yet to even produce proper use cases and proof of concept".

In a written email to MarketWatch, founder and CEO of deVere Group, Nigel Green said that Ethereum prices are foreseen to witness significant gains by end-2018 and could also hit $2,500 mark, followed by a further rise in the forthcoming two years.

However, not all cryptocurrency experts were convinced with this optimistic view.

Goldman Sachs, in its latest research noted that Bitcoin prices have dropped more than 60 percent from December 2017 intraday high of $19,511 to $7,351, and Ether prices have declined nearly 70 percent from an early-January intraday high of $1,432 to $450.

"We expect further declines in the future given our view that these cryptocurrencies do not fulfill any of the three traditional roles of a currency: they are neither a medium of exchange, nor a unit of measurement, nor a store of value. Importantly, we continue to believe that such declines will not negatively impact the performance of broader financial assets, because cryptocurrencies represent just 0.3 percent of world GDP as of mid-2018. In fact, we believe that they garner far more traditional media and social media attention than is warranted", Goldman further noted.

Lastly, in the poll, like Ethereum, gains are also expected from the most popular cryptocurrency going ahead. Bitcoin is forecast to nearly double and erase much of its losses made this year by end-2018, largely driven by a recovery in investors’ buying interest and renewed optimism among market players, an FxWirePro poll showed in July.

According to the median forecast of nearly dozen research organizations and institutional investors, taken July 16-28, the Bitcoin prices are seen reaching $15,372 by December this year. While 3 predicted BTC/USD to remain in the range of $5k-10k, 5 forecast it to surge to the $15k-30k zone, while only one forecast prices to drop below $2.5k.

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