Mainstream financial and economic media are paying attention to Ethereum. That is because of the strong rise in the price of Ethereum, and, consequently, some are starting to call it a bubble.
InvestingHaven’s perspective on this thesis is well known meantime. Ethereum prices of $1000 are coming, it is one or two years away. Their analysis is based on fundamental research on demand, both application usage and investment demand.
Today, surprisingly, The Economist released an article on cryptocurrencies, and, in particular Bitcoin and Ethereum. The writer argued that cryptocurrencies do have a sign of a bubble formation. That is because of very fast rising prices combined with the frenzy surrounding ICO (Initial Coin Offering) and ITO (Initial Token Offering). The writer hastens to say that unlike former bubbles cryptocurrencies have a use in real life. That is why they concluded saying it is a ‘healthy bubble’.
Rising prices are, according to us, no reason to call this a bubble. Arguably, however, the ICO and ITO hype comes closer to a bubble. That is because people are buying ICOs and ITOs even if the value of the companies they buy is not proven.
This what The Economist writes about Ethereum based ICOs
Take Ethereum, for example. It allows all kinds of projects, from video games to online markets, to raise funds by issuing tokens—essentially private money that can be traded and used within these projects. Although such ICOs need to be handled with care, they could also generate intriguing inventions. Fans hope that they will give rise to decentralised upstarts taking aim at today’s oligopolistic technology giants, such as Amazon and Facebook.
We agree that there are aspects to Ethereum based ICOs. But given the added value Ethereum is able to create, in general, it is indeed unfair to call this a bubble, at least in this stage.
Ethereum prices will go higher as long as Ethereum continues to deliver value. Let’s hope it will not become a real bubble.