It’s a momentous day for Ethereum (CCC:ETH-USD) as the second-largest cryptocurrency undertakes its highly anticipated Altair upgrade.
The upgrade is a critical step in moving Ethereum from an energy-intensive proof-of-work algorithm to a more environmentally friendly proof-of-stake model. Proponents say this will make the digital token more appealing to investors and eventually lead to the creation of Ethereum 2.0.
The massive amount of power needed to mine cryptocurrencies continues to be a drag on the sector.
Driving Prices Higher
Anticipation for the Altair upgrade is sky high and has helped push the price of Ether near its all-time high of $4,270 in recent weeks. Yesterday, Oct. 26, ETH closed at just under $4,000 per coin. Its sharp climb higher has mirrored the recent rise of Bitcoin (CCC:BTC-USD), which achieved a new all-time high above $66,000 on Oct. 20 but is selling off today, dropping to $58,810 in pre-market action.
Expectations for a successful Altair upgrade have some analysts predicting that the price of Ethereum could reach $10,000 over the next year. Analysts who follow the cryptocurrency sector praise Ethereum for its practical real-word applications, particularly its use in decentralized finance (DeFi), as well as smart contracts. The underlying blockchain associated with Ethereum is also used to create non-fungible tokens (NFTs), also known as digital art. This utility is what sets Ether apart in a crowded crypto market, say bullish fans of the digital currency.
Altair is the second major upgrade to Ethereum this year. It comes after the London hard fork that was the first step in transitioning to a proof-of-stake algorithm. The Altair upgrade moves Ethereum closer to being able to implement what analysts and industry proponents call the “Big Merge” that will usher in Ethereum 2.0.
That fully upgraded model of Ether will be more secure and require less mining, in addition to being better for the planet. Ethereum 2.0 is also expected to enhance the digital token’s usefulness in facilitating decentralized finance transactions around the world. It is the launch of Ethereum 2.0 that is expected to send the price of Ether sharply higher.
Ethereum Price Predictions
The price of Ethereum is currently up 450% year-to-date at right around $4,000. In the last month, the price has gained 38%. That leaves in the dust the 22% year-to-date gain for the S&P 500 stock index. Following the Altair upgrade, many analysts have Ethereum price predictions that show ETH breaching the $5,000 level and moving higher from there — potentially all the way to $10,000.
While the move upwards is unlikely to occur in a straight line, there’s every reason to trust that the price of Ethereum will continue marching higher given everything that is working in the cryptocurrency’s favor.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.