That’s what analysts from a major British bank say Ethereum (CRYPTO:ETH) should more than double from now until the end of 2024. Does this projection make sense?
Standard Chartered’s bullish Ethereum analysis
Geoff Kendrick, head of crypto research and emerging markets currency trading at Standard chartered (OTC: SCBF.F)set a closing price target of $8,000 Ethereum (CRYPTO:ETH) earlier this week.
Speaking to crypto news site The Block, Kendrick predicted on Tuesday that the US Securities and Exchange Commission (SEC) would approve the first exchange-traded funds (ETFs) that would track Ethereum’s spot price. He argued that the approval would spur large monetary inflows 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 called the cash flow effects of Bitcoin ETF approval, underscoring the long-term price appreciation that should result from these substantial investment moves.
Note that Kendrick based his price target for Ethereum on his last price target Bitcoin (CRYPTO: BTC) goal. In other words, he thinks Ethereum ETFs are good news for the crypto market as a whole, as they aren’t necessarily driving Ethereum prices up faster than the rest of the sector. Historically, Ethereum has closely followed Bitcoin’s price movements due to their strong market correlation and shared 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 result in the first Ethereum-based ETFs in the US markets. The funds won’t hit the market right away because the SEC must review each application in detail before approving anything. While this process could take months, the established precedent of Bitcoin ETFs suggests that SEC approval could be expedited. It’s still a big step toward final approvals, which now seems like a matter of time.
Crypto investors were excited by Standard Chartered’s prediction, sending Ethereum’s price 23% higher the next day, while Bitcoin rose as much as 7%.
Market reactions to the forecast and ETF news
However, the two largest cryptocurrencies barely moved on the actual ETF news. Ethereum has held steady since Kendrick’s prediction and Bitcoin fell a few percent on Friday.
But Kendrick’s analysis still seems directionally correct. Indeed, the combination of ETF approvals and Bitcoin’s recent halving should trigger another price surge for Bitcoin, Ethereum, and many smaller altcoins in the coming year. Growth investor Cathie Wood of Ark Invest also set her year-end Bitcoin target at around $150,000, with much loftier long-term goals in mind.
Evaluating Kendrick’s analysis and its implications
From a simple logic perspective, the idea of rising crypto prices makes sense.
Bitcoin’s market value is getting a boost from both sides of the supply-and-demand equation. The halving of Bitcoin mining rewards makes it harder to obtain freshly minted digital coins. At the same time, the new ETFs open the floodgates to near-instant Bitcoin investments by several new types of buyers – retail investors can now access Bitcoin ETFs (and soon Ethereum ETFs) in their retirement accounts, while institutional money managers can rely on trusted ETFs instead of new accounts to open on unapproved crypto exchanges.
Bitcoin is burning the value candle at both ends, experiencing increased 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 make up for the smaller rewards.
And where Bitcoin goes, other cryptocurrencies often follow. In particular, Ethereum tends to follow Bitcoin’s price chart quite closely:
Balance your portfolio with crypto investments
Standard Chartered’s Ethereum target is 116% above the smart contract pioneer’s current price (and 160% higher than where it was before Kendrick spoke to The Block). I can’t promise it will achieve exactly this goal, but I am confident that both Ethereum and Bitcoin will rise as the year progresses.
Unexpected twists and turns can throw a spanner in the works, of course, and other unplanned events could instead drive the cryptos even higher. You never really know what will happen in this young and volatile market until it happens.
Therefore, I wouldn’t recommend backing up the truck right now, betting on the literal farm, or otherwise going overboard with crypto investments. A diversified approach where crypto plays a modest role in a diversified portfolio will let you enjoy the benefits of a price increase 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.
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Anders Bylund has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool recommends Standard Chartered Plc. The Motley Fool has a disclosure policy.
According to Standard Chartered, the major cryptocurrencies will rise by 116%. Is it a purchase? was originally published by The Motley Fool
