News
1 The Most Popular Cryptocurrency Could Rise 310% by 2025, According to a Wall Street Analyst – No, It’s Not Bitcoin
Bitcoin (CRYPTO: BTC) has stolen the cryptocurrency spotlight. Its price has increased 125% over the past year due in large part to the excitement surrounding spot Bitcoin Exchange Traded Funds (ETFs). However, Ethereum (CRYPTO:ETH) has returned about 80% over the same period, and at least one Wall Street analyst sees bigger gains on the horizon.
Geoff Kendrick, head of digital asset research at Standard Chartered Bank, believes smart contract technology and Ethereum spot ETFs (if approved) could take the cryptocurrency to $14,000 by 2025. This implies an upside of around 310% from its current price of $3,400, an attractive figure. given the short timeframe.
Is Ethereum worth buying?
How smart contract technology could increase demand for Ethereum
THE Ethereum blockchain is programmable, meaning developers can create self-executing programs called smart contracts on the platform. This technology is the foundation of tokenization and other decentralized finance (DeFi) applications, and the many utilities of smart contracts could increase demand for Ethereum in the coming years.
To elaborate, tokenization is the process by which ownership rights to digital and physical assets are represented as tokens on a blockchain, which in turn serves as a digital ledger. Benefits include improved audit transparency because details are automatically and immutably recorded on the blockchain when tokens are traded. Tokenization could also improve asset liquidity by enabling fractional ownership of assets such as real estate, art, and other collectibles.
More broadly, DeFi platforms could expand access to financial services and reduce underlying costs by allowing users to borrow, invest and earn interest on money without intermediaries like banks. This would be particularly useful in regions of the world with few banks.
Ethereum is the blockchain best positioned to benefit if and when smart contract technology sees greater adoption. I say this because users clearly have a preference for Ethereum. It represents 56% of funds held in DeFi applications, meaning it holds a larger market share than all other blockchains combined, according to DeFi Llama. As a result, demand for cryptocurrency could soar if DeFi becomes mainstream, simply because users have to pay transaction fees to interact with products on the blockchain.
How Spot ETFs Could Increase Demand for Ethereum
Ethereum Spot ETFs are investment products that (if approved) would provide direct exposure to Ethereum while eliminating the hassle of cryptocurrency exchanges and blockchain wallets. Such funds would significantly reduce friction for individual and institutional investors, which could increase demand for the cryptocurrency and push up its price.
The story continues
Indeed, the recently approved Bitcoin spot ETFs illustrate how much demand such investment products could unlock. Specifically, Bitcoin spot ETFs issued by Black rock and Fidelity saw more cash inflows during their first month on the market than any other ETF launched in the past 30 years, according to Bloomberg Intelligence.
With this in mind, seven issuers have submitted applications for Ethereum spot ETFs, including BlackRock and Fidelity. The Securities and Exchange Commission (SEC) must make a decision by May 23, but investors shouldn’t take approval for granted. In fact, Bloomberg’s James Seyffart expects the SEC to deny the requests this time. His assessment is based on the fact that regulators did not engage with potential issuers to the same extent as they did with Bitcoin ETF spot applicants prior to approval.
Investors should think twice before purchasing Ethereum
Smart contract technology is intriguing, and the potential benefits of tokenization and other DeFi use cases are undeniable. However, widespread adoption of Ethereum-based smart contracts is likely still a long way off, even in the best case scenario.
Furthermore, I doubt that Ethereum spot ETFs will gain regulatory approval in May. Fortune recently reported that the SEC is investigating the Ethereum Foundation, which oversees the cryptocurrency, as part of its push to classify many cryptocurrencies as securities. The outcome could shake the market in unpredictable ways, and the SEC is unlikely to approve Ethereum spot ETFs while the investigation is ongoing.
For these reasons, I would avoid Ethereum at this time. This does not mean that the cryptocurrency will lose value. In fact, Geoff Kendrick may have hit his $14,000 goal. However, I see more interesting investments opportunities in Bitcoin and the stock market.
Should You Invest $1,000 in Ethereum Right Now?
Before you buy Ethereum stock, consider this:
The analyst team at Motley Fool Stock Advisor has just identified what they believe is the 10 best stocks for investors to buy now… and Ethereum was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow model of success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks every month. The stock advisory service has more than tripled the return of the S&P 500 Index since 2002*.
*Equity advisor will return starting March 21, 2024
Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
1 The Most Popular Cryptocurrency Could Rise 310% by 2025, According to a Wall Street Analyst – No, It’s Not Bitcoin was originally published by The Motley Fool