Standard Chartered, a global bank, has made a bullish prediction for Ether, the second-largest cryptocurrency, suggesting that its value could surge more than five-fold by the end of 2026. This projection adds to a series of optimistic forecasts for the cryptocurrency market.
As of the time of the report, Ether was trading at approximately $1,575.
Factors Driving Ether's Growth
Standard Chartered's Head of FX Research for the West, Geoff Kendrick, believes that Ether could potentially reach $8,000 within the next two years. This substantial growth is attributed to Ether's increasing utility in various applications, such as "smart contracts" on blockchain, gaming, and the tokenization of traditional assets.
Smart contracts are self-executing agreements with the terms of the contract directly written into code. They have gained significant traction in the blockchain space as they enable trustless and automated transactions. Kendrick's prediction hinges on the broader adoption of Ether in these applications, which could boost its demand and value.
The concept of "tokenization" involves representing real-world assets, such as real estate or stocks, as digital tokens on a blockchain. This process makes traditionally illiquid assets more accessible and tradeable. If Ether becomes a key player in this trend, it could contribute to its price growth.
Challenges in Cryptocurrency Valuation
Valuing cryptocurrencies like Ether is a challenging endeavor because they lack the traditional asset-backed mechanisms used for pricing stocks, bonds, or currencies. Instead, the value of cryptocurrencies is primarily influenced by investor sentiment and market dynamics.
Geoff Kendrick shared the bank's long-term "structural" valuation estimate for Ether, which ranges between $26,000 and $35,000. This estimate assumes the emergence of future use cases and revenue streams, some of which may not have materialized yet. It is based on the expectation that applications like gaming and tokenization will contribute to Ether's growth.
Kendrick clarified that the structural valuation estimate has a "very long-term" horizon, extending to around 2040.
Ether's Performance and Historical High
Ether has experienced a 30% increase in value this year. However, it still lags significantly, remaining almost 70% below its all-time high, which was approximately $4,869 and was reached in November 2021.
Notably, Standard Chartered had previously made bullish predictions for Bitcoin, suggesting that it could reach $50,000 in 2022 and $120,000 by the end of 2024. As of the time of the report, Bitcoin was trading around $27,275.
Standard Chartered's optimistic outlook on Ether's potential growth reflects the ongoing enthusiasm for cryptocurrencies in the financial industry. The bank's projection is grounded in the anticipation of broader adoption in various blockchain applications and use cases, which could drive Ether's value to new heights. However, it's important to note that the cryptocurrency market is highly speculative, and predictions should be taken with a degree of caution.