Expert Takes: Is Ethereum the Next Big Crypto Rally?

News, Opinion | January 22, 2021 By:

Recently, Ethereum’s ETH broke through its previous all-time high, leading many high profile investors and crypto experts to predict that there is more to come on the crypto rally. And with a Deutsche Bank survey showing investors considering BTC to be one of the most crowded trades at the moment, could ETH become the next destination for institutional investors to diversify their portfolio?

Below are some expert insights from the crypto and blockchain industry on the news.

Luis Cuende, Co-Founder of Aragon, said: 

“When thinking about what the Web3.0 vision provides, institutional investors will recognise that although sovereign digital currency (BTC) is central, the importance of a programmable economy (ETH) should not be underestimated.

In the same way that I predicted ETH would hit $1,000 back in 2017, I believe we will see it bounce between $2,500 and $7,500 this time around. With that said, ETH fundamentals are as robust as ever. Ethereum has actually found early product-market fit, and the protocol is making revenue. ETH is definitely maturing as an asset, and I expect ETH to reach $3,000 during this market.

The success of both Ethereum and the ERC20 tokens are intertwined. While competitors to Ethereum are making strides and benefitting from the ongoing market rally,  I think it’s very unlikely that these competitors will overcome the network effects that Ethereum has built. However, until Eth2.0 is fully functional, Polkadot, Cosmos and NEAR are well positioned to capture a meaningful market share.

If you think about Eth 1.0, it’s a “world computer” that can run relatively complex logic, but right now Eth 2.0 is quite limited. Smart contract support isn’t available yet, and it will be a long way until it is. Still, the promise of Eth 2.0’s impact in scaling Ethereum’s product-market fit shouldn’t be dismissed either.”

Philippe Bekhazi, CEO of Stablehouse, said: 

“Bitcoin is a gateway cryptocurrency, and being the second largest on the market, Ethereum seems like the logical next step for investors to diversify their portfolio. The Ethereum network has one of the largest ecosystems, as most stablecoins, DeFi protocols, and other Dapps operate on it. This gives the price of ETH enormous potential for growth, however, scalability issues have held it back thus far.  I believe that any traction in sustainable scaling will propel Ethereum to new highs, with $2000 largely feasible in the next few months.

Ethereum correlation to the success of the broader market is high, but is also tied to a vibrant and growing ecosystem that takes advantage of its existing network effect. It is unlikely that competitors, such as ADA or DOT will overtake ETH in the short run, although I do believe that Ethreum’s scalability concerns need to be addressed. Otherwise, ETH will certainly be at risk of losing its market share in the long run.

The outcome of the Eth2.0 upgrade is binary, in that I would expect to see a much higher price for ETH should the transition be successful. Equally, I would expect significant price drops should problems arise. Buy the rumor, sell the news. In other words, buy the anticipation, and buy more on actual positive results of scaling.”

Konstantin Richter, CEO and Founder of Blockdaemon said:

“With the excitement surrounding a new all time high from Ethereum, it still does not overshadow how far the protocol, DeFi ecosystem built on it, and contributors have come. Even with the ongoing transition to Proof-of-Stake and growing pains of making sure Eth2.0 progresses accordingly, Ethereum continues to prove itself as a tidal wave of innovation surrounding programmable money.

Ethereum has seen incredible levels of developer adoption and its core infrastructure has evolved massively since its last all time high in 2017, when it reached $1,432. The network is also undergoing its own “halving” type event, similar to that of Bitcoin last May. This will lead to the throttling of liquidity due to the bonding periods required in the transition to Eth2.0, and is likely to lead to further price surges in the short to medium term due to demand shortages. Bitcoin has doubled in price since 2017, and it appears to be on a similar bull run now even as Bitcoin reaches a temporary plateau. I believe Ethereum could reach double its all time high in the long term, as the network progresses along in its journey to Eth2.0

Ethereum and Bitcoin are becoming increasingly interconnected, with networks such as Stacks 2.0 bridging the gap between the two protocols. Add to this the significance of the volume of transactions which take place on Ethereum in terms of protocol adoption and Ethereum looks to be considerably highly undervalued.”

Craig Russo, Co-Founder of Polyient Games, said: 

“Currently, the prevailing narrative and value driver for ETH is the DeFi market and the various on-chain financial instruments that are being created with ETH as collateral. ETH serves as a relatively stable method to gain exposure to the overarching DeFi market, which undoubtedly has captured investor attention over the past year. Recent insights from Grayscale Investments LLC indicate that a wave of institutional investors moved to gain exposure to ETH in 2020, and the impending launch of CME Group’s cash-settled futures market for ETH should further drive this trend.

At Polyient, we actively monitor a number of different metrics across the ERC-20, and increasingly ERC-721 markets, as leading indicators for the direction of ETH price action. While Bitcoin has sufficiently carved out its own place as a stand alone digital asset, with strong narratives that tie in with macroeconomic trends, Ethereum continues to be home to more exploratory concepts and innovations. If the Ethereum experiment were to fail, it would be difficult for the larger cryptocurrency market to recover. Ethereum is currently limited by its scalability, but the network effects are strong enough to outweigh the limitations. This is especially true when it comes to DeFi, a market that is driven by large investors who are less impacted by network congestion and high transaction fees.

Overall, ETH is looking very bullish and could soon enter into a phase of USD price discovery after recently hitting its new all-time high. This is important to note, as the ETH/BTC ratio is substantially lower than where it stood during the previous bull run. With a far more favorable fundamental profile this time around, we believe ETH will begin to make up ground against BTC.”

Seamus Donoghue, VP Sales and Business Development at METACO said:

“Bitcoin has been getting all the headlines with its rally from $10K in October to over $40K in January. Ethereum has been largely unmentioned which is surprising given that over the same period ETH has rallied from $350 to a new all time high over $1400. In other words, both have seen a 400% rise but there has been no fanfare for Ethereum. While 2020 saw Bitcoin outperform all other crypto currencies–driven in large part by institutional adoption–the emerging theme in 2021 seems to be broadening interest in the wider “alt coin” market.

As the second largest crypto market cap next to Bitcoin, Ethereum has significantly outperformed Bitcoin since the start of the year, rising 100% versus a 27% gain for Bitcoin. As Bitcoin consolidates in the $40-35K region, retail investors are likely returning to the market with the new onramps provided by firms such as PayPal, these investors are moving “out the risk spectrum” into the broader crypto market. Institutional investors are also likely quiet participants in the rally; although Bitcoin is viewed as a macro inflation asset, ETH has the potential to be the foundation for a new decentralized capital market infrastructure. New protocols such as Cardano and Polkadot are also vying for the foundational infrastructure play but whatever the merits of their protocols need to overcome the significant developer mindshare and network advantage Ethereum currently has. It is early days but the entire sector is looking cheap compared to Bitcoin.

Ethereum breaking through its all time highs opens up the possibility of a significant spike higher and further outperformance versus Bitcoin. As investor excitement accelerates, it is likely that the trend of ETH outperforming BTC by 3:1 could continue, and could result in significantly more fireworks and headlines for ETH–$2000 to $3000 is not out of the realm of possibility for ETH by the end of the quarter.”