It's been a great year for Ethereum (ETH 3.91%) even with the recent pullback. The price of the blockchain's ETH native token has soared more than 440%. With a surge in the final days of December, there's a good chance that Ethereum could end the year well above $4,000.
The cryptocurrency probably won't more than quintuple again in the new year. But could Ethereum hit $10,000 in 2022?
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What it would take
To reach $10,000 next year, Ethereum would need to soar more than 150%. That would put the cryptocurrency's market cap at over $720 billion. By comparison, Bitcoin's (BTC 2.68%) market cap currently stands at a little under $900 billion.
So what would it take for Ethereum to deliver that kind of gain? One obvious potential catalyst is the major Ethereum 2.0 upgrade that's on the way. The merge of the blockchain's mainnet with the beacon chain is expected to complete in 2022. This will fully transition Ethereum from a proof-of-work model to a proof-of-stake model.
A significant increase in the adoption of the Ethereum blockchain could also boost its token to $10,000 or more. Ethereum already ranks as the most widely used blockchain for smart contracts. It's not a stretch to envision the upcoming upgrade attracting a lot more developers over the next year.
Bad news for one or more of the top rivals to Ethereum could also help on this front. For example, a massive security breach or extended downtime for Cardano or Solana just might encourage developers to switch to Ethereum.
Key obstacles
There are plenty of things that could get in the way of Ethereum's price rising to $10,000 next year. For one thing, the general environment for cryptocurrencies must remain strong. A broader sell-off would almost certainly pull Ethereum down in its wake.
The shard chain phase of the Ethereum 2.0 upgrade has already been pushed back from 2022 into 2023. Any further major delays in the upgrade could prevent Ethereum from moving significantly higher in the new year.
There's also a possibility that Ethereum could lose ground to other blockchains even if the upgrade isn't delayed. Other blockchains also support smart contracts but with much faster transaction speeds and much lower gas fees.
Don't overlook the scenario where Ethereum's platform experiences a major security breach or lengthy technical problems. A bug in Ethereum's software was exploited only a few months ago. It wasn't the first time and might not be the last.
Weighing the odds
So what are the chances that Ethereum will actually hit $10,000 in 2022? My best guess is that the odds are against it -- but not overwhelmingly so.
Since its launch in 2015, Ethereum has delivered gains of more than 160% in all but two years. Historically speaking, that might seem to make the cryptocurrency's prospects of reaching the target level pretty high. However, the bigger a cryptocurrency gets, the harder it becomes to grow as rapidly.
But the ingredients definitely exist to fuel another impressive year for Ethereum. Billionaire Mark Cuban predicts that the blockchain will be a monster winner in 2022 as new apps are built on it. He could very well be right. I suspect that Cuban could be right. Even if he's not, Ethereum could still deliver solid returns for investors over the long term.
