This is what analysts from one of the major British banks say Ethereum (Crypto: ETH) It should double between now and the end of 2024. Is this prediction reasonable?
Standard Chartered's bullish analysis for Ethereum
Jeff Kendrick, Head of Emerging Markets Cryptocurrency and Forex Research at Standard Chartered (OTC: SCBF.F)suspended a year-end price target of $8,000 Ethereum (Crypto: ETH) Earlier this week.
Speaking to cryptocurrency news site The Block on Tuesday, Kendrick predicted that the US Securities and Exchange Commission (SEC) would approve the first… Exchange-traded funds (ETFs) that track the spot price of Ethereum. He said the approval would inspire significant fund flows into the Ethereum cryptocurrency, similar to the inflows that followed the approval of bitcoin ETFs in January.
The analyst also noted that he correctly described the money flow impacts of Bitcoin ETF approval, and emphasized the long-term price boosts that should result from these large investment moves.
Keep in mind that Kendrick based his Ethereum price target on his latest Bitcoin (Crypto: Bitcoin) Goal. In other words, Ethereum ETFs are good news for the cryptocurrency market as a whole, and do not necessarily drive Ethereum prices faster than the rest of the sector. Historically, Ethereum has closely followed Bitcoin's price movements due to its strong market correlation and combined investor sentiment.
“Given that we now see Bitcoin reaching the $150,000 level by the end of 2024, this would mean an $8,000 level for ether,” the Standard Chartered analyst said.
The Securities and Exchange Commission is close to approving Ethereum ETFs
Two days later, the SEC approved a rule change that will bring the first Ethereum-based ETFs to US markets. The money doesn't hit the market right away, as the SEC must review each application in detail before approving anything. While this process could take months, the established precedent for Bitcoin ETFs suggests that SEC approval may be expedited. This is still a big step towards final approvals, which seems like a matter of time now.
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 forecasts and ETF news
However, the two largest cryptocurrencies barely moved on the ETF news. Ethereum has remained flat since Kendrick's forecast and Bitcoin fell two percent on Friday.
But Kendrick's analysis still seems directionally correct. The combination of ETF approvals and the recent Bitcoin halving should already lead to another price rally for Bitcoin, Ethereum, and several smaller altcoins over the next year or so. Growth investing star Cathie Wood of Arc Invest also pegged her year-end Bitcoin target at around $150,000, with Much loftier goals in the long term in consideration.
Evaluating Kendrick's analysis and its implications
From a simple logic perspective, the idea of rising cryptocurrency prices makes sense.
Bitcoin's market value is receiving boosts from both the supply and demand sides. The halving of Bitcoin mining rewards makes it harder to obtain newly minted cryptocurrencies. At the same time, new ETFs are opening the floodgates to almost direct 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 rely on familiar ETFs. ETFs instead of opening new accounts on unapproved cryptocurrency exchanges.
When the value candle is burned at both ends, Bitcoin experiences high demand and very limited supply. This is a recipe for higher prices, especially since the necessary Bitcoin mining will not make economic sense unless coin prices rise enough to offset the smaller rewards.
Where Bitcoin goes, other cryptocurrencies tend to follow. In particular, Ethereum tends to follow Bitcoin's price chart closely:
Balance your portfolio with crypto investments
Standard Chartered Bank's target for Ethereum stands 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 that it will achieve this exact goal, but I am convinced that both Ethereum and Bitcoin will rise as the year goes on.
Unexpected fluctuations can disrupt business, of course, and other unplanned events could push cryptocurrencies higher instead. You never know what's going to happen in this young and volatile market until it happens.
Hence, I would not recommend backing up the truck, betting on the craft farm, or overinvesting in cryptocurrencies right now. A diversified approach in which cryptocurrencies play a modest role in a diversified portfolio will allow you to enjoy the benefits of rising prices without risking it all. Ethereum buying looks to be strong today, but I wouldn't hold my breath waiting for Kendrick's $8,000 target to be met.
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Anders Billund He 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 Disclosure policy.
The top cryptocurrencies will rise by 116%, according to Standard Chartered. Is it a buy? Originally published by The Motley Fool
