Focused growth investors are expecting explosive growth for Ethereum.
Earlier this year, Ark Investment's Cathie Wood surprised crypto investors with her prediction: Bitcoin's (BTC -5.30%) Prices will reach $1.5 million by 2027. Wood said the recent approval of Bitcoin's first spot exchange-traded fund (ETF), increased buying by institutional investors, and the impending Bitcoin halving (which will make it twice as difficult to mine the cryptocurrency) are all I believe it will bring. Drive the bulls into the world's largest cryptocurrency.
But Wood made an even more bullish prediction. Ethereum (Ethereum -5.43%), currently trading at around $3,200. In Ark Investment's “Big Ideas” presentation early last year, Wood said Ethereum's market cap could exceed $20 trillion by 2032, including a market value of more than $166,000 per token. price will be required. He said the price of Ethereum could actually rise by more than 5,000%. Will you achieve that goal?
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How is Ethereum different from Bitcoin?
Ethereum is the largest cryptocurrency on the open-source Ethereum network. Bitcoin (BTC -5.30%) In two important ways. First, while miners can only mine Bitcoin tokens on the Bitcoin blockchain, developers can create their own tokens, decentralized apps (dApps), and non-fungible tokens (NFTs) on the Ethereum network. Masu. Because of its flexibility, Ethereum has become a core pillar of the Web3 movement, which aims to disrupt centralized app platforms such as: appleApp Store and alphabetGoogle Play with decentralized applications and payment methods.
Second, Ethereum requires much less electricity to mine than Bitcoin. The Ethereum network previously used the same energy-intensive proof-of-work (PoW) mining method as Bitcoin, but in September 2022 it introduced a more energy-efficient proof-of-stake (PoS) mining method. ) method. This migration, called “merging,” reduced the network’s total mining energy consumption by 99.95%. Ethereum bulls believe that the upgrade will make it easier for the Ethereum network to scale and support more Web3 projects.
What is the main catalyst for Ethereum?
Ethereum is currently the second largest cryptocurrency in the world after Bitcoin. This is also one of his eight cryptocurrencies, including Bitcoin and six stablecoins. PayPal (PYPL -1.67%) and gemini (GUSD 0.10%) –Listed on New York State Department of Financial Services' “Green List” of pre-approved virtual currencies. This relative stability suggests that the U.S. Securities and Exchange Commission (SEC) may eventually approve a Spot Ethereum ETF.
However, the SEC recently reiterated its view that Bitcoin is the only cryptocurrency that can be classified as a commodity rather than a security because it still uses PoW techniques comparable to the physical mining of precious metals. The SEC said that while the PoS method is more environmentally friendly, it makes the cryptocurrencies that use it more like derivative contracts, meaning Ethereum is more like a security than a commodity.
The SEC recently requested further information from the Ethereum Foundation and remains committed to reclassifying Ethereum and other Ethereum tokens as securities. This position suggests that the SEC will probably not approve spot Ethereum ETFs in the near future. This is because commodities are generally valued at spot prices.
But despite this, Ethereum is burning tokens on a regular basis, which could stabilize its price in the short term. Future upgrades to the Ethereum network could make it even easier to facilitate financial transactions and develop more decentralized tokens and apps. It's also possible that more companies will start accepting Ether, the coin that underpins the Ethereum blockchain, as a payment option, giving institutional investors more access to the cryptocurrency, even if it's not as easily accessible as Bitcoin through spot ETFs. There is a possibility of accumulation.
Should we believe Wood's bullish predictions?
Investors should take Wood's $166,000 price target with a grain of salt. First, the famous growth investor has made a number of bad decisions.her company's flagship Ark Innovation ETF (ARKK -4.58%) While the S&P 500 index rose 76%, it actually fell 4% over the past five years. Ark also offers its own Ethereum futures ETF and is seeking approval for a Spot Ethereum ETF, so Wood's opinion is likely more subjective than objective.
That said, Wood said that the expansion of Ethereum's developer base and its potential to “displace many traditional financial services” and “take share from existing financial intermediaries” are key to Ethereum's development. I firmly believe it will push the price towards her lofty goal of $166,000. Personally, I think Ethereum may not reach her high price in 2032. However, if the Ethereum Foundation can upgrade its network to catch up with Bitcoin, Ethereum will definitely stabilize and potentially go even higher in the coming years.
Suzanne Frey, an Alphabet executive, is a member of the Motley Fool's board of directors. Leo Sun has a position at Apple. The Motley Fool has positions in and recommends Alphabet, Apple, Bitcoin, Ethereum, and PayPal. The Motley Fool recommends this option: His June 2024 $67.50 Short Calls on PayPal. The Motley Fool has a disclosure policy.
