Tom Lee predicts Ethereum will experience a massive price rally in the closing months of the year. The research chief at Fundstrat Global Advisors tips the second-ranked cryptocurrency to reach $1,900 before the end of 2018. XRP briefly upstaged Ethereum to claim the second spot on the market capitalization rankings before regaining its place.
Ethereum Price Rally Imminent
According to Bloomberg, cryptocurrency bull, Tom Lee expects an imminent trend reversal for Ethereum in the fourth quarter of 2018. In a letter to Fundstrat’s clients on Thursday (September 27, 2018), Lee identified Ethereum’s recent struggles with the coin losing more than 50 percent of its value in Q3 2018.
Lee pointed out that Ether has underperformed its top-ten counterparts by two standard deviations. According to Lee, such a situation means that Ethereum will experience a price bounce. Commenting on the matter, Lee said:
Ethereum is about to stage a trend reversal and rally strongly. Sentiment is currently overly negative.
For Lee, his forecast relies on Ethererum’s historical performance when underperforming top coins by two standard deviations. According to the Fundstrat chief, when such situations occur, ETH always bounces back, reclaiming its losses.
The cryptocurrency bull also expects the ETH price to reach $1,900 by the end of the year. As at press time, ETH’s price is $226, increasing by more than six percent over the past 24 hours.
Ethereum 2018 Price Struggles
Ethereum’s recent negative trend flies in the face of the high price correlation that exists in the cryptocurrency market. Bitcoin, altcoins and ICO tokens often appear strongly coupled with little price deviations.
For ETH, the problem appears to stem from the failure of many ICO projects, as well as a strengthening US dollar. Most ICO projects are domiciled on the Ethereum blockchain and contributed immensely to the meteoric rise of the cryptocurrency.
However, after the ICO mania of 2017, many tokens experienced huge selloffs as projects failed to take off. This situation materially diminished ETH’s value over time. In early August, Ether fell below $300 setting a new one-year low. Since then, the cryptocurrency has continued in its downward trajectory.
If Lee’s forecast comes true, then ETH would have surged by more than 700 percent. It would also mean that Ethereum would set a new all-time high (ATH). ETH’s previous ATH stands at $1,349 reached in mid-January 2018.
Image courtesy of Coinmarketcap.