Standard Chartered, in a recent note, has predicted a substantial rise in the value of Ethereum, the world’s second-largest cryptocurrency. They anticipate that Ethereum, often referred to as “ether,” could reach $8,000 by the end of 2026. This would represent a staggering 400% increase from its current price of approximately $1,600.
According to Geoff Kendrick, the Head of FX Research, West, and Digital Assets Research at Standard Chartered, the path to higher Ethereum prices might be a bit slower compared to Bitcoin (BTC). Still, they foresee Ethereum eventually surpassing Bitcoin in terms of price multiple relative to current levels, with a ratio of 5.0x for Ethereum compared to 3.5x for Bitcoin.
However, this is just seen as a “stepping stone” toward a more ambitious long-term valuation of $26,000 to $35,000. It’s important to note that this projection relies on the assumption of use cases and revenue streams that are yet to be realized.
This bullish forecast is partly based on expected improvements to the Ethereum blockchain. Ethereum is actively working on enhancing its performance through layer two scaling solutions and upcoming architectural improvements. Notably, there are plans to introduce “danksharding,” a technology that could allow Ethereum to handle a whopping 100,000 transactions per second. A version of this, called “proto-danksharding,” is set to be rolled out in early 2024, which should substantially reduce transaction costs on the Ethereum network.
Geoff Kendrick believes that these improvements will solidify Ethereum’s dominance in the smart contract space, potentially increasing its price-to-earnings (P/E) ratio in the coming years, even if its earnings don’t see a significant boost.
Additionally, the demand for Ethereum is expected to rise as it finds new applications. Notably, NFT (Non-Fungible Token) transactions, a leading use case for Ethereum, are predicted to expand. While NFT market activity has experienced fluctuations, it often follows broader crypto market trends, and with the recent resurgence in the crypto market, NFTs are expected to recover as well.
The growth of blockchain gaming will also contribute to increased demand for NFTs, consequently boosting Ethereum. NFTs play a crucial role in creating scarcity within these games by representing virtual assets such as in-game items or virtual real estate.
Furthermore, the tokenization of real-world assets, where ownership rights are represented as blockchain tokens, is expected to benefit Ethereum. Tokenization facilitates fractional ownership of traditionally illiquid investments, like real estate, at a lower cost compared to other methods, such as IPOs. It also enables round-the-clock trading, immediate settlement, ownership transparency, better investor access, and reduced costs.
Kendrick also predicts that inflows into Bitcoin, which he believes could reach $120,000 by the end of 2024, will spill over into Ethereum. Moreover, the upcoming Bitcoin halving is anticipated to exert upward pressure on the entire crypto market. Positive regulatory developments, such as the approval of cryptocurrency spot exchange-traded funds (ETFs), are also expected to benefit Ethereum.
Both Bitcoin and Ethereum are likely to benefit from the end of the bond market sell-off, which has seen Treasury yields reach 16-year highs.
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