Ethereum, Ether, ETH Performance
Investing.com – is next to the cryptocurrency with the highest market capitalization. At a price of $ 3,486, the ether brings it to a market cap of a proud $ 410 billion.
The analysts of Standard Chartered (LON 🙂 Bank have meanwhile announced a target price of 26,000 to 35,000 dollars. In the following, we will take a look at how this target price came about.
Ethereum advantages over Bitcoin
Ethereum has some notable advantages compared to Bitcoin. While the BTC only serves as a store of value, Ether is a software platform.
The central component of this platform are smart contracts. These programs are able to independently execute and verify transactions. It is therefore an automatism for coping with a wide variety of routine tasks that are used in vehicle insurance, car leasing, parking lot use, mail order business and many more.
There are also decentralized autonomous organizations (DAO). It is essentially a type of digital company that has no management level. You will look in vain for a conventional managing director. The cornerstones of business operations are based on a code that can no longer be changed. Shareholders can only decide through a democratic voting process how future developments will be.
Another component are NFTs (Non-Fungible Token). These certify that a person is the owner of a digital asset. These have become known in the past, among other things, with the hype surrounding CryptoPunks and CyberKongz – small digital images, some of which are traded for six-figure amounts.
Meanwhile, everyone is talking about the decentralized finance industry (DeFi), which is based on smart contracts. This area is symbolic of the revolution in traditional finance and generally covers everything that has to do with money in any way.
What is the ETH target price of $ 26,000 to $ 35,000 based on?
The starting point for the ETH rating is the BTC. The Standard Chartered Bank compares the market capitalization in the credit card sector with the potential transactions in the non-bank sector. In order to determine the value of ETH compared to BTC, it is also necessary to compare the value of global banks with the value of credit card companies.
The idea behind this is that Bitcoin is only suitable for payment flows such as those that occur when using credit cards. Ethereum, on the other hand, is equated with the banking sector, because it is a platform that offers a wide variety of financial services.
On this basis, the upper value of the price target of $ 35,000 for the ether is based.
Standard Chartered says:
“Put simply, the market capitalization of banks worldwide is four times the market capitalization of credit card companies. With this analogy, ETH can have a potential market capitalization of $ 4 trillion. The total number of ETH currently in circulation is 117 million, which equates to a price of $ 35,000 for the ether. That is 10 times the current price. “
The lower value of the ETH target price of $ 26,000 results from the approach of a portfolio optimization. The starting point is the Bitcoin high at the end of 2017. Only at this point in time, an optimal 2 percent distribution of cryptocurrencies across the global portfolios is assumed.
The analysts at Standard Chartered Bank also assume that Ethereum’s market capitalization will catch up with BTC over time.
However, one is well aware that the target range seems a bit high compared to the current price.
“A range of USD 26,000 to USD 35,000 may seem high compared to the current ETH rate (just under USD 4,000), but we think the current rate reflects both the increasing complexity of ETH (compared to BTC) and the uncertainty in In relation to the development of ETH. “
It is also important to know that the ether does not advance into the target area without the Bitcoin also quoting at the upper end of its valuation range. This is an estimated $ 175,000.
And with that we have already summarized the quintessence on which the price forecast is based. Some bold assumptions and comparisons, some of which are lacking basic figures. In addition, there is an obvious rounding error in the example of $ 35,000. And yet, regardless of the price forecast, the research contains some interesting aspects, as well as an unexpected turnaround that lets everything appear in a new light.
Ether or Bitcoin – which is the better investment?
If you currently have to decide between investing in Ether or Bitcoin, the Standard Chartered recommends the former. This is because ETH 2.0 is in the starting blocks. With the launch there will be new functions, better scalability and with the end of mining there will be fewer environmental concerns.
“In view of these factors, we consider ETH to be a better buy than BTC in the medium term. We assume that the exchange rate between the currency units of Ethereum and Bitcoin (ETH-BTC) will double from current levels to around 0.161, bringing the total market capitalization of ETH to that of BTC. “
Ethereum 2.0 – curse or blessing?
The extent to which Ether can continue its triumphal march depends not least on when and whether Ethereum 2.0 becomes a reality. But only with this upgrade is it possible to scale the number of transactions, which has positive effects on network utilization and transaction fees. At the same time, the energy-intensive Proof-of-Work (PoW) is to be switched to Proof-of-Stake (PoS).
However, there is no fixed schedule for the upgrade, which also harbors risks from the perspective of the Standard Chartered Analysts.
“ETH 2.0 is a complex and comprehensive upgrade of an already demanding platform … The uncertain time frame in connection with the complexity of the new platform could lead to disappointment for some investors and users. This increases the risk that competitors who offer comparable platforms can gain market share in some areas. “
The ether competition never sleeps
And there is certainly no shortage of competitors. There are already some blockchains that are quite a bit ahead of Ethereum in terms of transaction speed, costs and energy efficiency.
In two days, the so-called Ethereum killer will show whether it is able to give Vitalik Buterin gray hair. On September 12th, the Alonzo upgrade goes online on the mainnet, making the ADA smart contract capable.
is also in full swing and is becoming increasingly well-known, which means that the SOL is already at number 6 in the crypto world rankings. The unique Solang programming language and the proof-of-history technology are virtually predestined for smart contracts, DeFi and NFT.
Transactions are executed in less than a second, which is also due to the multi-threading. While all other blockchains process transactions linearly, Solana processes several in parallel. Only SafeCoin, the first community version of the Solana Blockchain, operates at such a high level.
ETH 2.0 threatens regulation
But ETH 2.0 also harbors a completely different risk – regulation. A point that gives even analysts a headache.
“A big unknown is whether ETH 2.0 will continue to be classified as a commodity (like ETH 1.0) or as a security. The Securities and Exchange Commission (SEC) initially determined that the Ethereum platform was sufficiently decentralized to allow it to be classified as a commodity. But the transition to PoS could call this view into question. “
If that is the case, there is a retroactive threat not only to high fines, but also to the revision of all Ethereum-based business concepts. These then have to be brought into line with the rules to combat illegal activity, ensure financial stability and protect investors.
It is quite conceivable that some of the projects will turn away from Ether and switch to other blockchains if the implementation of the regulatory guidelines requires too much effort or is even impossible. In addition, many of the competitors offer simple options for converting ETH smart contracts, Defi, dApps and so on, to their own technical standards.
When the SEC takes a close look at Ethereum 2.0, the bar for a free ticket à la merchandise is likely to be higher anyway. That’s because one of the people at the SEC who gave Ethereum the green light in 2018 is personally benefiting from the success of the project.
This is William H. Hinmann, who is a partner in the law firm Simpson Thacher & Bartlett LLP. He moved from the law firm to the SEC in 2017, gave Ethereum a charter, and then went back.
Now you are wondering what is wrong with that?
Simpson Thacher & Bartlett LLP is a member of the Enterprise Ethereum Alliance. An organization that has set itself the task of making the Ethereum blockchain a global industry standard. Thus one can speak of a “certain” bias. For more information on how to do this, see the article
Should Ethereum 2.0 become a reality, which is of crucial importance for its continued success, it should be more difficult to get an advocate in a crucial position at the SEC.
Speaking of advocates – the Standard Chartered does not seem to be completely altruistic for the Ether either. She is also a member of the Enterprise Ethereum Alliance. The disclaimer on the research contains more than 3000 words, but no reference to this membership is sought.
Ultimately, it should be noted that the further Ethereum success depends on Ether 2.0. The three central questions are:
Is ETH 2.0 even coming?
If so, when will Ethereum 2.0 be operational?
Will there be regulation by the SEC?
From Marco Oehrl