By Gaurav S. Iyer, IFC Published : October 12, 2017
For those who watch the cryptocurrency market closely, the $400.00 price level is to Ethereum what the $5,000 level is to Bitcoin. It is a crucial milestone that can bolster support for the long-term Ethereum price forecast.
ETH is poised to reach that level after the Byzantium upgrade next week. However, something else may drive Ethereum prices to $400.00—something unconnected to current Ethereum news.
The Bitcoin hard fork: SegWit2X.
Odd as it sounds, ETH could surge after the Bitcoin hard fork takes place. It could generate more than enough momentum to carry the price above $400.00, granted that there are no external shocks to the market.
You see, the splitting of Bitcoin’s blockchain is causing a heavy rotation of funds out of Ethereum and Ethereum-based coins. That is why BTC dominance—Bitcoin’s share of overall market cap—reached 53.5% on Thursday. Investors are selling ETH for BTC.
For further evidence of this trend, look at how cryptocurrencies performed over recently.
Daily Ethereum Chart:
The Ethereum to USD exchange rate advanced 1.74% to $307.16, which is not a bad showing, but the Ethereum to Bitcoin rate dropped 6.76% in the same window.
What does that tell you?
It says that investors are moving money into Bitcoin and out of Ethereum. However, they are doing this for a reason. Those that are bullish on Bitcoin Classic want to own the currency, which comes as no surprise. But what is slightly less intuitive is that those supporting Bitcoin2X have to buy the currency as well. How else will they receive their tokens after the split?
This creates a short-term tailwind for Bitcoin. Excited by the gains in BTC prices, other investors jump aboard to extract their own gains. This creates a second and possibly third tailwind. Except these tailwinds were just made by traders looking to skim off the Bitcoin rally.
They are likely to return to ETH as soon as the fork is over.
If we are correct, there will be a massive appreciation in Ethereum prices through the last two months of the year. We could see ETH accelerate towards our Ethereum price prediction of $1,000 by 2018, though there is even more potential in store beyond that time frame.