Ethereum
The leading cryptocurrency will rise by 116%, according to Standard Chartered. Is this a purchase?
A Standard Chartered analyst expects Ethereum to double by the end of the year. Here’s how this bullish analysis holds up and how it moved the markets this week.
Analysts at a major British bank say Ethereum (ETH -0.06%) is expected to more than double by the end of 2024. Does this projection make sense?
Bullish analysis of Ethereum by Standard Chartered
Geoff Kendrick, Head of Cryptocurrency Research and Emerging FX Markets at Standard Chartered (OTC: SCBF.F), set a year-end price target of $8,000 on Ethereum (ETH -0.06%) at the start of the week.
Speaking to crypto news site The Block on Tuesday, Kendrick predicted that the U.S. Securities and Exchange Commission (SEC) would approve the former. exchange traded funds (ETF) tracking Ethereum Spot Price. He argued that the approval would spark large inflows of money into the Ethereum cryptocurrency, similar to the inflows that followed the approval of spot Bitcoin ETFs in January.
The analyst also noted that he correctly assessed the money flow effects of the Bitcoin ETF approval and highlighted the long-term price increases expected to result from these substantial investment moves.
Be careful, Kendrick based his Ethereum price target on his latest Bitcoin (Bitcoin 1.36%). In other words, Ethereum ETFs seem like good news for the cryptocurrency market as a whole, without necessarily driving Ethereum prices up faster than the rest of the sector. Historically, Ethereum has closely followed Bitcoin’s price movements due to their high correlation with the market and mixed investor sentiment.
“Given that we now see Bitcoin reaching the $150,000 level by the end of 2024, this would imply an $8,000 level for Ether,” the Standard Chartered analyst said.
SEC Moves Closer to Approving Ethereum ETFs
Two days later, the SEC approved a rule change that will see the first Ethereum-based ETFs appear on U.S. exchanges. The funds aren’t hitting the market immediately, as the SEC must review each application in detail before approving anything. While that process could take months, the precedent set by Bitcoin ETFs suggests that SEC approval could be expedited. There’s still a big step toward final approvals, which now seems like just a matter of time.
Cryptocurrency investors were excited by 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
The two largest cryptocurrencies, however, haven’t moved much on the ETF news. Ethereum has held steady since Kendrick’s forecast, and Bitcoin was down a few percent on Friday.
But Kendrick’s analysis still seems correct. The combination of ETF approvals and the recent Bitcoin halving should indeed cause a new surge in the prices of Bitcoin, Ethereum and many Smaller Altcoins over the next year or so. Cathie Wood, Growth Investing Star Ark Invest also set its year-end Bitcoin target at around $150,000, with much more ambitious long-term goals in mind.
Evaluation of Kendrick’s analysis and its implications
From a simple logical perspective, the idea of cryptocurrency prices rising makes sense.
Bitcoin Market Value Receives Boosts From Both Sides calculating supply and demand. Halving Bitcoin mining rewards makes it harder to obtain freshly minted digital coins. At the same time, the new ETFs open the floodgates to near-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 fund managers can rely on familiar ETFs instead of opening new accounts on unapproved cryptocurrency exchanges.
Burning the value candle at both ends, Bitcoin is experiencing higher demand and strictly limited supply. That’s a recipe for higher prices, especially since the necessary Bitcoin mining process no longer makes economic sense unless coin prices rise enough to compensate for the lower rewards.
And where Bitcoin goes, other cryptocurrencies tend to follow. In particular, Ethereum tends to follow the Bitcoin price chart very closely:
Ethereum Price data by YCharts
Balancing Your Portfolio with Crypto Investments
Standard Chartered’s Ethereum target is 116% above the smart contract pioneer’s current price (and 160% above where it was before Kendrick spoke to The Block). I can’t promise it will hit that exact target, but I am confident that Ethereum and Bitcoin will rise as the year goes on.
Of course, unexpected twists and turns can throw a spanner in the works, and other unforeseen events could instead push cryptos even higher. You never really know what’s going to happen in this young and volatile market until it happens.
Therefore, I would not recommend turning back, betting the literal farm, or going overboard with crypto investments right now. A diversified approach with Cryptocurrency plays a modest role in a diversified portfolio will allow you to reap the benefits of a price spike without risking everything. Ethereum looks like a solid buy today, but I wouldn’t hold my breath waiting for Kendrick’s specific target of $8,000 to materialize.
Anders Bylund has positions in Bitcoin and Ethereum. The Motley Fool has positions and recommends Bitcoin and Ethereum. The Motley Fool recommends Standard Chartered Plc. The Motley Fool has a disclosure policy.