Ethereum faces competition for more energy-efficient new verification blockchains.
But its network upgrades and new ETFs can be brought back to the Bulls.
Investors should estimate the salt content of ARK Invest as salt.
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ether(Encryption: ETH)The local cryptocurrency of the Ethereum blockchain has lost more than 30% of its value in the past 12 months. Its first share of ETF was approved last July, but the funds didn’t attract as much attention. Bitcoin‘ (Encryption: BTC) Early ETFs.
Instead, Ethereum seems to be shocked by competition for new, faster blockchains, slowing cyber activity and unpredictable tariffs from the Trump administration. Nevertheless, some investors remain strongly optimistic about the future of Ether. One of these bulls is Cathie Wood, a Ark investment, who believes the price of Ether can reach $166,000 by 2032.
This will earn nearly 6,220% and increase its market cap to over $20 trillion. Wood also bullish Bitcoin currently has a market capitalization of $2 trillion. Can ether soar to these levels, or should it maintain more realistic expectations?
Image source: Getty Images.
Ethereum was originally run on a Proof of Work (POW) mechanism like Bitcoin. This means it needs to be mined by a GPU or other chip.
But in 2022, Ethereum transitioned to a proof of verification (POS) mechanism, which is about 99% higher than the POW mechanism. Therefore, Ethereum on the Ethereum blockchain is now fixed (or locked as a reward) rather than mined.
Ethereum’s transition to POS blockchain also enables IT to support smart contracts for the development of decentralized applications (DAPP), kill-free tokens (NFTS), and other crypto assets. Bitcoin’s POW blockchain does not support smart contracts.
Therefore, the value of Ethereum is usually related to the popularity of Ethereum as a development platform. Bitcoin is still worthwhile due to its scarcity and limited supply – as the highest supply of 21 million tokens has been mined.
Ether does not have a fixed maximum supply, but as its network activity rises, its overall supply drops. That’s because a portion of every transaction fee in Ether was burned. However, as Ethereum’s network activity slows down, its supply will rise as more Ethereum tokens are created than burned.
Therefore, although Bitcoin is always deflated, Ethereum can be both inflation and release. However, to be a popular platform for developers and investors, it needs to continue to provide fast trading hours with low fees.
It’s getting harder, like Solana and Cardano Challenge Ethereum. Solana handles transactions much faster than Ethereum, while Cardano usually offers lower fees.
Ether’s next big upgrade (The Verge) is designed to upgrade its security features and reduce hardware requirements so that it can run on smaller devices such as smartphones, wearables and Internet of Things (IoT) devices. It also aims to reduce its off-chain 2 (L2) fees through a series of upgraded networks to clear more space for fresh data. These upgrades can indirectly help it reduce congestion problems by absorbing its core 1 (L1) network traffic.
Assuming these upgrades introduce more developers and investors, their network activity will increase, reduce supply and stabilize Ether’s price. Another potential catalyst would be the approval of new spot ETFs with stacking capabilities.
Ether’s first Ether Eth ETFs only keep Ether in cold storage and are not through Stage Rewards of any of its interests. The next batch can be made more attractive by passing these rewards (about 3% to 5% per year).
However, competition from other POS blockchains can still prevent ether, lack of approval for new ETFs with existing rewards, or curb the inexplicable macro environment of market investments in cryptocurrencies and other speculative investments.
Wood believes that as Ethereum becomes the foundational layer of a new digital finance ecosystem, the value of Ethereum will rise, which challenges traditional banks with decentralized financial (DEFI) applications, NFTS and STIKENIZED versions of real-world assets.
She also expects Ether’s accumulated yield will be more attractive than the U.S. Treasury yield as interest rates drop, and will receive approval from a new State Kinging ETF to attract more institutional investors. Just like Bitcoin, Wood expects Ethereum institutions to adopt continuously intensified in order to increase their prices in the coming years.
The paper sounds reasonable, but claims it could hit a $20 trillion market cap over the next seven years – it seems too bullish compared to its current $3.4 trillion market cap.
So while accumulating Ether might be wise to launch new network upgrades, attract more developers, burn more tokens and get more attention through new ETFs, we should do the predictions of Cathie Wood with a grain of salt. It may stabilize and improve, but its long-term value is not easy to measure.
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Leo Sun has no position in any of the stocks mentioned. Motley fool has a place and recommends Bitcoin, Ethereum and Solana. Motley Fool has a disclosure policy.
