Secondary to Bitcoin by market cap, Ethereum has been neck and neck with Bitcoin over the last year across major inflection points, the team at CoinGecko noted in a new report.
Over one year, however, CoinGecko pointed out that Ethereum lags behind Bitcoin “at 31.6% vs 85.8% gains respectively.
The potential for Ethereum ETFs buoyed the cryptocurrency but its gains “have been wiped, leaving it trailing behind Bitcoin at 5.9% vs 51.9% respectively, year-to date.”
Despite the price slump of both cryptocurrencies in late July, “much is expected from Ethereum ETFs, based on the wildly successful launch of Bitcoin ETFs.”
Considering these and other factors, “what price range can ETH holders expect in the near to medium future?”
Analysts, outlets, and fund managers “have priced Ethereum at an average of $6,404 by the end of 2024.”
CoinGecko added that all eight prediction issuers “are bullish on Ethereum, and expect ETH to rise between ~ $4,400 and $166,000.”
CryptoNews has the lowest target of $4,443.63, while Cathie Wood of Ark Invest has the highest at $166,000.
While all the pundits expect a price increase, only two “expect ETH to hit six digits.”
VanEck predicts ETH to rise to $154,000 in “a bullish scenario, while Cathie Wood expects it to rise to $166,000.”
However, most price predictions “are based on a longer timeframe, with only Bernstein, QCP Capital, and Standard Chartered providing a time horizon within the year.”
With that, their predictions also tend “to be on the lower end of $6,000 – $8,000.”
This year, the biggest driver of Bitcoin’s all-time high “of $73,780 was the legitimization effect via exchange-traded funds (ETFs).”
CoinGecko further noted that this “investment vehicle opened access to Bitcoin but without the risks posed by self-custody.”
The same effect is now expected of Ethereum ETFs. However, a Grayscale survey, conducted between April 30 and May 2, 2024, “showed a sentiment split.”
While 25% of respondents think ETF approval “would elevate Ethereum capital inflows, 25% think it would not impact Ethereum’s investing thesis.”
CoinGecko added that the most important finding “from the survey is that funds launching Ethereum ETFs will have a lot of marketing work to do, as 43% of respondents were not familiar with a spot-traded Ethereum ETF concept.”
As of August 6, in the last 30 days, ETH’s price “plunged 15.5%, hovering around $2,600. This is reminiscent of the plunge that happened in April 2022 following the start of the Fed’s interest rate hiking cycle.”
CoinGecko also noted that this time, the Fed fund futures price “in three rate cuts by the end of 2024, with the first one in September with an 82.7% probability.”
Depending on the severity of the need to “stimulate the economy with rate cuts, this could be either a tailwind or a headwind.”
If there is a hard landing leading to a deep recession, it is “unlikely that this will help ETH capital inflows because weakened discretionary spending would cut them short.”
On top of that, the expected Bitcoin sell-off pressure “from Mt. Gox repayments may put further pressure on ETH.”
Moreover, a couple of days after ETH ETF approvals, it became clear that “sell the news” pressure was afoot, as ETH’s price dropped by over 10%.
According to CoinGecko’s report, on the upside, Ethereum is firmly “positioned as not only the cryptocurrency tailing Bitcoin but also one with higher growth potential.”
Its reliance on Layer 2 networks, plus sharding, “makes it the primary candidate to take in all the traffic from multiple use-case scenarios, per VanEck analysis.”
On the regulatory front, efforts are underway “to make ETH more decentralized. Taking the number one spot with a 29% staking share, Lido launched the Community Staking Module (CSM) to alleviate centralization concerns, leaving the “security” designation behind.”
Overall, analysts and pundits agree that ETH’s price “is on an upward trajectory in the long-term, well above its current ~$2,600 price level.”
Following the transition from proof of work (PoW) to proof of stake (PoS) in September 2022, Ethereum’s bottom line “weakened and strengthened simultaneously.”
On one hand, the requirement of ETH staking “to become a validator reduced the network’s potential to maintain decentralization.”
Likewise, a PoS network is likelier “to censor transactions, as users’ trust is delegated to network validators.”
CoinGecko’s report added that this contrasts PoW networks “like Bitcoin’s mainnet, which is trustless. Moreover, Ethereum is a work-in-progress coding project with a complicated roadmap, which has the potential to bring unforeseen changes.”
Therefore, it is more difficult to “sell” Ethereum to potential investors “because it holds elevated risks. In comparison, Bitcoin is an exceedingly conservative digital commodity focused on absolute scarcity and network security, making it more enticing for investors looking to hedge against currency devaluation.”
On the other hand, Ethereum’s PoS brings blockchain scaling “to reality, as a network of Layer 2 networks.”
On average, the Ethereum network facilitates double the daily transactions of Bitcoin.
At the same time, average Ethereum transaction fees “have steadily declined.”
As the Ethereum 2.0 roadmap implements sharding and “achieves 100,000 transactions per second (TPS) vs Bitcoin’s 7 TPS,” a clear picture emerges:
Having ~13.9% of total crypto market share, Ethereum is a proxy “for dozens of Layer 2 networks and their respective cryptocurrencies, simplifying Ethereum appeal to blockchain investors as prime smart contract real estate.”
Neither committedly inflationary nor deflationary, Ethereum’s network activity “determines its status.”
The EIP-1559 token-burning mechanism “typically leads to inflationary periods during lessened network activity while exerting deflationary pressure during heightened network demand.”
Investing exposure to Ethereum is akin to early “holding of Visa/Mastercard shares but for a global decentralized financial network.”
In other words, without a capped maximum ETH supply and “with PoS-derived downsides, Ethereum may have trouble attracting capital that flooded Bitcoin.”
Yet, the potential for a deep ecosystem of decentralized applications (dApps) hosted “by the Ethereum network may offset those factors and even exceed them.”
All the forecasts were made in 2024, and the averages “are taken as indicative.”
Without Cathie Wood’s outlier, Ethereum’s average price prediction “would be $6,404 by the end of 2024 or early 2025.”
Methodology
The study shared by CoinGecko examines price predictions of Ethereum (ETH) in 2024, “from various pundits and renowned industry experts.”
The prediction issuers cited “here are: CryptoNews, DigitalCoinPrice, VanEck, Changelly, Cathie Wood, Geoff Kendrick, QCP Capital, and Bernstein.”