The picture above is an artistic representation of Holland from 1634-1637. The monkeys represent the people in a frenzied state of mind over tulips, a new flower that the Dutch people had never seen before, which was then considered to be rare. They were so valuable that people conducted their commerce with the tulip bulbs instead of money. This artificial value of the tulip came from speculation that they were scarce. Some people made a fortune by selling their tulips, in which other people followed. The price began to dive and everyone realized that they sold everything they owned for just a flower. Panic set in; contracts weren't honored and sales didn't occur. This made restitution nearly impossible for those stuck with tulips. In one year's time, the price of a tulip went from being able to buy you a house to being worth the price of an onion.
This is one of the earliest examples of a bubble in the market in recorded history. The lesson to be learned here involves being wary of speculation. The Dutch people and the local media made the tulip a much bigger phenomenon than it was, which drove the purchase of tulips in the first place. While there was a profit to be made, the Dutch still wound up in a depressed market after the speculation ended. The U.S. is in the middle of a Bond bubble, due to the Federal Reserve's low interest rates, which will inevitably rise and cause a panic to sell-off bonds. This happened with the Dot Com bubble and the Real Estate bubble that put the U.S. into a recession. If you are a current or future investor, you should keep this story in mind when playing with the market. History has shown that this will eventually happen again.
The second half of this year hasn't seen much growth out of Ethereum since last summer. The question now is what does the future of this crypto currency look like and what might create an uptrend in the price? Here are a couple things to consider before investing in or selling your Ethereum.
1. The United Arab Emirates are working to replace their currency with a blockchain, most likely Ethereum, by 2020. This could create a surge in buying and an inflated price for Ethereum, which would make a nice opportunity to profit in the near future. Dubai is also expected to transfer all of their government documents onto a blockchain by that time, since it would be more secure than leaving it on a server somewhere.
2. Unlike Bitcoin, Ethereum could be favorable for our government. It would allow for more secure smart contracts and would help prevent fraud. It's a very democracy friendly crypto currency. Depending on whether regulations get implemented or loosened, this could have either a positive or negative impact on the purchase of Ethereum in 2017. Outlook in the U.S. looks positive with a business and technology friendly president-elect.
3. Everything in the crypto currency realm seems to revolve around Bitcoin somehow. If we see an increase in the price of Bitcoin, then you can bet that Ethereum may follow suite. The volatilily of these cryptos makes them a major gamble, but could pay off big if you pay close attention and refrain from missing that next spike. If Bitcoin hits $1000, I would sell it. In the case of Ethereum, I think there is a glass ceiling still waiting to be shattered. Look for uncertainty in the market or irrational exuberance.