Prediction: Ethereum Will Hit a New All-Time High in 2025

While Ethereum (CRYPTO: ETH) is still up 15% for the year, its recent performance has been troubling, to say the least. Over the past 30 days, Ethereum is down nearly 25%. So, understandably, many investors are bearish on Ethereum's prospects over the next 12 months.

That being said, Ethereum could still hit a new all-time high in 2025. That would require Ethereum to double in price to $5,000, but there are several reasons I think that is likely to happen. Let's take a closer look.

The spot Ethereum ETFs

Let's start with the spot Ethereum ETFs , because these are currently getting all the attention from crypto investors. Those investors' opinions really depend on how they view Ethereum's ability to recover from the disastrous August "flash crash," when it lost 15% of its value in just five minutes.

If you're a glass-half-full investor, then the spot Ethereum ETFs should provide a price boost, simply due to all the money now pouring into Ethereum from both retail and institutional investors. The largest of these new spot ETFs -- the iShares Ethereum Trust (NASDAQ: ETHA) -- has already attracted more than $1 billion from investors. Over time, investors should continue to boost their allocation to Ethereum, and that should provide consistent buying pressure.

Nevertheless, there are ways in which the Ethereum ETFs are underperforming early expectations. While nobody anticipated that they'd pull in more money from investors than the new spot Bitcoin (CRYPTO: BTC) ETFs, some of them are having trouble gaining traction with panicked investors.

In fact, some of the new spot Ethereum ETFs have been experiencing net outflows in August because of all the recent market turbulence. If you expect the price of Ethereum to crater further, then you'd better adjust your expectations of how these ETFs will perform.

Ethereum's correlation with Bitcoin

The good news, if you're starting to doubt the impact of the new ETFs, is that Ethereum's price has historically been very highly correlated with Bitcoin's. According to research from Coinbase Global (NASDAQ: COIN) , the correlation has typically ranged between 0.85 and 0.95. In early 2023, though, it started to fall ever so slightly. Still, the current correlation between these two assets is 0.82. That's the highest correlation with Bitcoin of any major cryptocurrency.

If Bitcoin takes off -- as many investors think it will -- then so should Ethereum.

For the sake of argument, let's say that Bitcoin skyrockets to a price of $150,000 in 2025, as investment firm Bernstein is currently predicting. That would represent a gain of nearly 150% from Bitcoin's current price of $61,000. If we assume that the correlation between Bitcoin and Ethereum remains fairly constant, then we would expect Ethereum to capture approximately 82% of that gain. So if Bitcoin soars by 150%, then Ethereum should soar by nearly 125%.

That's more than doubling, folks. And that's a big reason I think Ethereum will soar in value in 2025. At today's current price of $2,644, we would need a gain of only 89% to hit a price of $5,000. We don't need Ethereum to soar by 150% or outperform Bitcoin. As long as Bitcoin skyrockets higher, Ethereum just needs to go along for the ride.

How likely is a price of $5,000?

There are several ways of assessing just how likely a price rise to $5,000 is for Ethereum. One is by examining crypto prediction markets, where real-world investors are putting up millions of dollars as they forecast possible outcomes.

Image source: Getty Images.

On Polymarket, for example, it's possible to view a range of future predictions about Ethereum. For example, 24% of respondents think that Ethereum will hit a new all-time high in 2024. Another 7% of people think that Ethereum will hit a price of $10,000. And 5% think that Ethereum will hit a price of $15,000.

Of course, I understand completely if you would like to take these predictions with a grain of salt. Maybe you don't believe in the wisdom of crowds. But I do -- and especially when the crowd is putting real money behind its predictions. As a result, I'm increasingly bullish that Ethereum will hit a new all-time high in 2025.

Dominic Basulto has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy .