Standard Chartered, a British multinational bank and financial services company, has released a bullish forecast for Ethereum, the second-largest cryptocurrency by market capitalization. According to the bank’s research note, Ethereum could soar to $8,000 in the next three years and eventually reach $35,000 in the long term.
The bank’s head of digital assets research, Geoff Kendrick, said that Ethereum has more use cases than Bitcoin, the leading cryptocurrency, and that it will benefit from the growing demand for gaming and asset tokenization. He also said that Ethereum will reclaim its dominance in the smart contracts space, especially with the emergence of Layer 2 solutions such as Arbitrum that enhance the network’s efficiency and scalability.
Kendrick also compared the price potential of Ethereum and Bitcoin, saying that he expects Ethereum to rise 5x from current levels, while Bitcoin will rise 3.5x. “We think the path higher for ETH prices may take longer than for BTC, but we see ETH eventually reaching a higher price multiple than BTC relative to current levels (5.0x versus 3.5x),” he said in the note.
Ethereum Faces Challenges in the Short Term
Despite the optimistic outlook, Kendrick acknowledged that Ethereum faces some challenges in the short term that could hinder its price growth. One of them is the ongoing transition from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) one, which aims to make the network more secure, sustainable, and scalable.
The transition involves several phases and upgrades, such as the recent London hard fork that introduced the EIP-1559 proposal, which changes how transaction fees are calculated and burned. The next phase is expected to be the merge of the current PoW chain with the PoS chain, which is scheduled for late 2021 or early 2022.
Another challenge is the increasing competition from other smart contract platforms, such as Cardano, Solana, and Polkadot, which claim to offer faster, cheaper, and more scalable solutions than Ethereum. These platforms have attracted a lot of attention and investment in recent months, as well as developers and users who are looking for alternatives to Ethereum’s high fees and congestion.
Kendrick said that these challenges could create volatility and uncertainty for Ethereum in the near term, but he believes that they will be overcome in the long run. He said that Ethereum has a strong network effect and a loyal community that will support its development and innovation.
Ethereum Aims for $8,000 as a Stepping Stone
Kendrick said that he sees $8,000 as a realistic target for Ethereum in the next three years, given its current fundamentals and market conditions. He said that this level would represent a significant milestone for the cryptocurrency and a stepping stone to his long-term valuation estimate of $26,000-$35,000.
He based his long-term valuation on several factors, such as the total value locked (TVL) in decentralized finance (DeFi) applications, the market capitalization of non-fungible tokens (NFTs), and the adoption of Ethereum as a store of value and a medium of exchange.
He also said that he expects Bitcoin to cross $175,000 before Ethereum reaches $35,000, implying a correlation between the two cryptocurrencies. He said that this would give Ethereum a market cap of roughly $4 trillion, depending on the deflationary impact of its EIP-1559 update.
This is not the first time that Kendrick has made a bullish prediction for cryptocurrencies. He previously said that he expects Bitcoin to reach $120,000 and the entire crypto market to rise as well. However, it seems that he is more bullish on Ethereum than on Bitcoin.
