Winter officially arrived this week with the winter solstice on Dec. 21. However, a crypto winter has been in full blast for a while now.

Many digital tokens have plunged by 90% or more this year. Even the biggest crypto names haven't been spared from the carnage. Ethereum's (ETH 0.40%) price has dropped nearly 70% this year. 

But hope seemingly springs eternal in the hearts of some crypto investors. They know that no winter lasts forever and think that a new season could bring a massive rebound for the strongest cryptocurrencies. Could Ethereum even hit $10,000 in 2023?

A steep hill to climb

Let's acknowledge right out of the gate that there's a really steep hill for Ethereum to climb to even come close to reaching $10,000. To do so within just 12 months appears to be next to impossible.

The current price for Ether tokens is hovering around $1,200. Ethereum's peak price was a little over $4,800 back in early November 2021. That all-time high is still way below $10,000.

Now, though, Ethereum is nearly 75% below its peak. That means that it would have to almost quadruple, simply to regain that level. To get to $10,000 would require Ethereum to skyrocket well over 700%.

But next to impossible isn't the same thing as impossible. Ethereum actually has delivered gains of a lot more than 700% in the past. For example, in 2017, the token's price vaulted nearly 9,300% higher. The year before that, Ethereum jumped 784%.

What it would take

Are the current dynamics for cryptocurrencies the same as they were during Ethereum's previous meteoric rises? Obviously not. But we can at least take a stab at what it would take for Ethereum to hit $10,000 next year.

Probably the most important thing that would need to happen is a return of investors' confidence. And that confidence would need to be broad-based to create the kind of environment needed for Ethereum to really take off.

It's absolutely critical that the U.S. avoids a recession in 2023 for investors' confidence to return quickly. However, this wouldn't be nearly enough on its own. We'd likely need to see clear signs that inflation was under control. Ideally, the Federal Reserve would even lower interest rates.

Significant improvement in the overall environment that boosts investors' confidence is a key prerequisite. Ethereum would also almost certainly need some great news of its own to have a chance at reaching $10,000.

One potential source of such good news is the blockchain-platform's ongoing upgrade. Ethereum wrapped up its transition to a proof-of-stake validation model this year with the completion of the merging of its mainnet with the Beacon chain. This move slashed the blockchain's energy consumption by close to 99.95%.

The next big step is the transition to sharding, which will dramatically improve Ethereum's scalability and capacity. It should also pave the way for a major reduction in transaction fees.

This sharding upgrade is currently estimated to take place in 2023 and 2024. Any delays would make it much more difficult for Ethereum to build momentum. But if the upgrade goes smoothly and ahead of schedule, it could provide a key catalyst for the cryptocurrency.

The more likely scenarios

Is it possible that Ethereum will hit $10,000 in 2023? Yes. Is it probable? No.

The prospects of avoiding a recession right now don't appear to be all that great. Even if it does happen, there's no guarantee that inflation will decline enough for the Fed to halt its rate hikes. The odds of interest-rate cuts next year seem especially low. I wouldn't bet on Ethereum's sharding transition progressing ahead of schedule, either.

Objectively, I suspect there are two scenarios that are much more likely for 2023 than Ethereum reaching $10,000. The first is that the cryptocurrency continues to muddle along as it has throughout much of the past three months. The second is that Ethereum enjoys a solid bounce that falls far short of even regaining its previous all-time high.

There's no way to know how long the current crypto winter will last. But when the thawing begins, Ethereum should be one of the big winners -- even if it doesn't come close to reaching $10,000.