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Ethereum and Bitcoin, two of the biggest cryptocurrencies in the market, are set to at least double their price before the end of the year, according to analysts.
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The rally for Bitcoin is predicted to stem from more ETFs coming into the market, giving the cryptocurrency more legitimacy as an investment asset.
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Goldman Sachs pegs Ethereum to hit $8,000, in-line with breakeven inflation.
After hitting a new all-time high in October, analysts are betting on Ethereum and Bitcoin to double in value before the end of year.
The analyst behind Plan B, who correctly predicted the price of Bitcoin in September and came very close in October, believes that Bitcoin will reach $98,000 this month itself and go on to breach $135,000 in December.
This is in-line with other price predictions for Bitcoin that banking on the world’s oldest cryptocurrency. Standard Chartered, for instance, pegs that Bitcoin will hit $100,000 in 2021 or early 2022.
Meanwhile, global investment bank, Goldman Sachs, estimates that Ethereum’s price is set to reach $8,000 by year-end — higher than what a recent panel of 50 cryptocurrency experts, put together by Finder, predicted at $5,000.
The push for Bitcoin to double in value
After the first ever Bitcoin-based exchange traded fund (ETF) hit the New York Stock Exchange (NYSE), the money from institutional investors has been flooding in. According to CoinShare’s weekly report, crypto investment products saw inflows of $288 million for the week ending on October 31 — Bitcoin accounted for 93% of it at $269 million.
The cryptocurrency, which turned 13 years old on October 31, is up by 112% this year so far and hit the all-time high of $67,000 in October. Analysts expect the cryptocurrency to rise further with more ETFs coming in, giving a boost to Bitcoin’s legitimacy at least as an investment asset, not an actual medium of exchange.
Ethereum price to rise in-line with breakeven inflation
Goldman Sachs’ prediction for Ethereum to breach $8,000 is based on the second-largest cryptocurrency’s historical correlation to inflation. According to the banking behemoth, cryptocurrencies have traded in-line with inflation breaks — the difference between the yield of a nominal bond and an inflation-linked bond of the same maturity — since 2019.
“It has tracked inflation markets particularly closely, likely reflecting the pro-cyclical nature as a ‘network based’ asset. And the lastest spike in inflation breakevens suggests upside risk if the leading relationship of recent episodes was to hold (grey circles),” said the note.
According to an analysis by blockchain data firm Kaiko, Ethereum has offered higher returns than Bitcoin with respect to market risk over the past one year. As compared to this time last year, the cryptocurrency’s price is up by 1,000% — leaving not just Bitcoin, but other major cryptocurrencies, in the dust.
Ethereum’s price rally
The rally in Ethereum has been aided by the growth of decentralised finance (DeFi), which is touted for its probable disruption of the international monetary system by eliminating the need for middlemen like banks, remittance providers and other players. Moreover, the boom in non-fungible tokens (NFTs) has all seen a host of new projects use ether and jump onto the Ethereum blockchain.
Ethereum’s protocol is currently in the midst of an upgrade from the proof-of-work (PoW) to the proof-of-stake (PoS) consensus method, which is expected to reduce the energy consumed for mining — validating transactions — by 99%.
Challenges that lie ahead for Ethereum
Ethereum’s growth trajectory is not without its challenges. The time taken for the community to agree on the upgrade left opportunity for other blockchains to pop up — like Cardano, Solana, Polkadot and others — each claiming to solve either for high transaction fees, energy consumption or transaction times.
Some of the participants in Finder’s panel of 50 cryptocurrency experts expect that their ‘Ethereum Killers’ could run up to win their fair share of the DeFi and NFT market from Ethereum.
Bitcoin, however, is expected to continue its reign as the biggest player of the crypto world — at least for the time being.
In view of the coming wave, banks and financial institutions in the US have been on a crypto hiring spree. Over the past three years, they have onboarded more than 1,000 crypto experts. Currently, financial institutions are offering significant bonuses to attract even more talent their way, according to Bloomberg.
Indian technology companies and crypto exchanges are also on the lookout for crypto talent. The demand for talent has jumped over the last 8-10 months with more than 12,000 job openings on the docket in October, according to a report by Bangalore-based staffing specialist Xpheno cited by the Economic Times.
Since the Supreme Court lifted the ban on cryptocurrencies in 2020, interest in blockchain technology has seeped back into the country, despite the Reserve Bank of India’s (RBI) attempts to dissuade investors. BrokerChooser, an investment broker comparison company, pegs that there are currently 10.07 crore crypto owners in India — reportedly higher than everywhere else in the world.
By PRABHJOTE GILL @ Insider