Analysts at a major British bank say that Ethereum (CRYPT: ETH) it should more than double between now and the end of 2024. Does this projection make sense?
Bullish Ethereum Analysis from Standard Chartered
Geoff Kendrick, Head of Cryptocurrency and Emerging Markets Currency Research at Chartered Standard (OTC: SCBF.F)set a year-end price target of $8,000 Ethereum (CRYPT: ETH) earlier this week.
Speaking to cryptocurrency news site The Block on Tuesday, Kendrick predicted that the US Securities and Exchange Commission (SEC) would approve the first exchange traded funds (ETF) tracking Ethereum spot price. He argued that approval would inspire large inflows into the Ethereum cryptocurrency, similar to the inflows that followed after the approval of detect Bitcoin ETF in January.
The analyst also noted that he correctly qualified the money flow effects of the Bitcoin ETF approval and underlined the long-term price increases that should result from these important investment moves.
Of course, Kendrick based his Ethereum price target on his latest bitcoin (CRYPT: BTC) aim. In other words, Ethereum ETFs seem like good news for the cryptocurrency market as a whole, and they don't necessarily boost Ethereum prices faster than the rest of the sector. Historically, Ethereum has closely followed Bitcoin price movements due to its strong correlation with the market and shared investor sentiment.
โConsidering that we now see Bitcoin reaching the $150,000 level by the end of 2024, this would imply a $8,000 level for Ether,โ the Standard Chartered analyst said.
SEC Nears Approval of Ethereum ETFs
Two days later, the SEC approved a rule change that will result in the first Ethereum-based ETFs in US markets. The funds won't hit the market right away, as the SEC must review each application in detail before approving anything. While this process could take months, the established precedent of Bitcoin ETFs suggests that SEC approval can be accelerated. It's still a big step toward final approvals, which now seems like a matter of time.
Cryptocurrency investors were enthusiastic about Standard Chartered's forecast, sending the price of Ethereum up 23% the next day, while Bitcoin rose as much as 7%.
Market reactions to ETF forecasts and news
However, the two largest cryptocurrencies barely moved on the actual ETF news. Ethereum has been stable since Kendrick's forecast and Bitcoin was down a couple of percent on Friday.
But Kendrick's analysis still seems directionally correct. The combination of ETF approvals and the recent Bitcoin halving In fact, it should drive another price surge in Bitcoin, Ethereum, and many smaller altcoins over the next year or so. Growth investing star Cathie Wood Ark Invest's Bitcoin target for the end of the year was also set at approximately $150,000, with much higher long-term goals in mind.
Evaluation of Kendrick's analysis and its implications.
From a simple logic perspective, the idea of โโrising cryptocurrency prices makes sense.
Bitcoin Market Value Is Getting Boosts From Both Sides the calculation of supply and demand. The halving of Bitcoin mining rewards makes it more difficult to get hold of newly minted digital coins. At the same time, the new ETFs open the floodgates to almost direct investments in Bitcoin by several new types of buyers: Retail investors can now access Bitcoin ETFs (and soon Ethereum ETFs) in their retirement accounts , while institutional money managers may rely on familiar resources. ETFs instead of opening new accounts on unapproved crypto exchanges.
Burning the value candle at both ends, Bitcoin is seeing increased demand and strictly limited supply. That's a recipe for higher prices, especially since the necessary Bitcoin mining process stops making economic sense unless coin prices rise enough to offset the smaller rewards.
And where Bitcoin goes, other cryptocurrencies tend to follow. In particular, Ethereum tends to follow the Bitcoin price chart quite closely:
Ethereum Price data for Y Charts
Balancing your portfolio with cryptocurrency investments
Standard Chartered's Ethereum target sits 116% above the smart contract pioneer's current price (and 160% beyond where it was before Kendrick spoke to The Block). I can't promise that it will reach this exact goal, but I am convinced that both Ethereum and Bitcoin will rise as the year progresses.
Unexpected turns can complicate the process, of course, and other unplanned events could send cryptocurrencies even higher. You never really know what will happen in this young and volatile market until it happens.
Therefore, I wouldn't recommend backing out, literally betting on the farm, or going overboard with cryptocurrency investments right now. A diversified approach with cryptocurrencies play a modest role in a diversified portfolio It will allow you to enjoy the benefits of a price increase without risking everything. Ethereum looks like a solid buy today, but I wouldn't hold my breath waiting for Kendrick's specific $8,000 target to materialize.
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Anders Bylund has positions in Bitcoin and Ethereum. The Motley Fool holds and recommends Bitcoin and Ethereum. The Motley Fool recommends Standard Chartered Plc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
