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1 Top cryptocurrencies will soar 116%, according to Standard Chartered. Is it a purchase?
Analysts at a major British bank say that Ethereum (CRYPTO: ETH) is expected to more than double between now and the end of 2024. Does this projection make sense?
Bullish Standard Chartered Ethereum Analysis
Geoff Kendrick, Head of Emerging Markets Crypto and Exchange Research at Chartered Standard (OTC: SCBF.F), set a year-end price target of $8,000 at Ethereum (CRYPTO: ETH) earlier this week.
Speaking to crypto news site The Block on Tuesday, Kendrick predicted that the US Securities and Exchange Commission (SEC) would approve the first exchange traded funds (ETFs) tracking the spot price of Ethereum. He argued that the approval would inspire large flows of money into the Ethereum cryptocurrency, similar to the flows that followed after the approval of spot Bitcoin ETFs in January.
The analyst also noted that he correctly classified the money flow effects of the Bitcoin ETF approval and highlighted the long-term price increases that are expected to result from these substantial investment moves.
You see, Kendrick based his Ethereum price target on his latest Bitcoin (CRYPTO: BTC) target. In other words, Ethereum ETFs strike you as good news for the crypto market as a whole, not necessarily boosting Ethereum prices faster than the rest of the sector. Historically, Ethereum has closely tracked Bitcoin’s price movements due to its 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,” said the Standard Chartered analyst.
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 on US markets. The funds will not hit the market immediately, as the SEC must analyze 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 long way toward final approvals, which now seems like a matter of time.
Crypto investors were excited by Standard Chartered’s prediction, sending the price of Ethereum up 23% the next day, while Bitcoin rose as much as 7%.
Market Reactions to ETF Predictions and News
However, the two biggest cryptocurrencies barely budged on the actual ETF news. Ethereum has remained stable since Kendrick’s prediction and Bitcoin fell a few percent on Friday.
But Kendrick’s analysis still seems directionally correct. The combination of ETF approvals and the recent Bitcoin halving should indeed drive another price surge for Bitcoin, Ethereum and many smaller altcoins over the next year or so. Rising investment star Cathie Wood of Ark Invest also set her year-end Bitcoin target at approximately $150,000, with much higher long-term goals in mind.
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Evaluating Kendrick’s analysis and its implications
From a simple logic point of view, the idea of rising cryptocurrency prices makes sense.
Bitcoin’s market value is receiving boosts from both sides of the supply and demand calculation. Halving Bitcoin mining rewards makes it harder to obtain newly minted digital coins. At the same time, the new ETFs open the floodgates for near-direct investments in Bitcoin by several new types of buyers – retail investors can now access Bitcoin ETFs (and soon Ethereum ETFs) in their retirement accounts, while money managers institutions can rely on family resources. ETFs instead of opening new accounts on unapproved cryptocurrency exchanges.
Burning the value candle at both ends, Bitcoin is facing increased demand and strictly limited supply. This is a recipe for higher prices, especially since the necessary process of mining Bitcoin ceases to make economic sense unless coin prices increase enough to offset the lower rewards.
And where Bitcoin goes, other cryptocurrencies tend to follow. In particular, Ethereum tends to closely follow Bitcoin’s price chart:
Ethereum Price Chart
Balancing Your Portfolio with Crypto Investments
Standard Chartered’s Ethereum target is 116% above the smart contract pioneer’s current price (and 160% beyond where it was before Kendrick spoke to The Block). I can’t promise that it will exactly achieve this goal, but I am convinced that both Ethereum and Bitcoin will increase as the year goes on.
Unexpected twists and turns can derail the work, of course, and other unplanned events can push cryptocurrencies even higher. You never really know what will happen in this young and volatile market until it happens.
Therefore, I wouldn’t recommend backing the truck, literally betting the farm, or going overboard with crypto investments right now. A diversified approach with crypto playing a modest role in a diversified portfolio will allow you to enjoy the benefits of a price rise without risking everything. Ethereum looks like a solid buy today, but I wouldn’t hold my breath waiting for Kendrick’s specific $8,000 target to materialize.
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Anders Bylund has positions in Bitcoin and Ethereum. The Motley Fool has positions and recommends Bitcoin and Ethereum. The Motley Fool recommends Standard Chartered Plc. The motley fool has a disclosure policy.
1 Top cryptocurrencies will soar 116%, according to Standard Chartered. Is it a purchase? was originally published by The Motley Fool