ETH Set To EXPLODE?? DON'T Miss This Report!! 🤓

could eth hit 35k some think it's unlikely but according to a recent research report it is indeed a strong possibility in this video i'm going to dive into this report and tell you exactly why its valuation makes so much sense no hopium here just cold hard analysis so if you're considering hoddling eth this simply cannot be missed [Music] if we're all sitting comfortably let me debrief you the names powers guy powers and guess what crypto's my middle name baby yeah now a couple of things before we get down to it although i may be the most shagadelic crypto superspy around i ain't no financial advisor baby it's just not how i like to party and that means this video is for entertainment purposes only yeah you know what i mean now also i should point out that i hold eth as part of my personal portfolio good to have these things out in the open right now if you want to keep this party going fondle that subscribe button and ring my little bell baby that way youtube will make sure you always get an invite to my next little soiree okay that's enough foreplay let's get down to business yeah well there's something you won't be able to unsee so what is this report of which i speak well it's a research report that was released by standard chartered a little over a month ago now you may not have even known about it and i don't blame you neither did i last month was so topsy-turvy and most of our focus was on congress the sec china and the fed however after having gone back and read the report i can tell you that it is super insightful the reason as to why this is so significant is because it was one of the first institutional research reports on eth since eip 1559 was activated in august no doubt one of the biggest ethereum upgrades for years labeled ethereum investor guide this piece made a structural case for an eth price of between 26 and 35k not only that but it also makes the case for ethereum being a better investment than bitcoin over the medium term and it sees one eth being worth 0.16 btc roughly essentially nearly 2.2 times more upside potential than bitcoin it also foresees a flipping in the not-too-distant future something that appears to be transforming into conventional wisdom anyways let's dive right into the first section and that is on the structural considerations here the reports authors talk about the economic case for ethereum more specifically that its value comes not really from the currency itself but from the network think about it why do you invest in bitcoin you do so because you know that bitcoin is limited in supply it's scarce and hence it's a rare item much like the investment case for gold the value is derived from the item however in the case of ethereum its value is derived from demand for its use in a network a decentralized network of nodes on which thousands upon thousands of dapps have been built the comparison that's often put out there by other researchers is that ethereum is a digital silver to bitcoin's gold the most recent of which was deutsche bank while that author appreciates the value that eth has over bitcoin it's incorrect to use that example as a benchmark a more fitting comparison is that given by the authors in this piece they likeneth to a digital oil essentially the fuel that runs the decentralized machine powering d5 now if you've been following this channel for some time then you'll have heard me talk about the fat protocol theory that's the notion that base layer networks are able to capture considerable value from the applications that are built on top of them this is in contrast to our current internet infrastructure where the value usually accrues to the applications that are built on top of it think about the tcp ip protocol which has been in use for over 30 years there is virtually no value that can be captured in the protocol however running on top of that we have the entire internet companies like amazon google facebook and many more billion dollar behemoths that have captured all that value on the application layer now in the case of ethereum and other smart contract blockchains demand to use the protocol naturally leads to demand for the native currency that powers it as is pointed out in this research piece all of these use cases here have created an ecosystem that simple payment protocols can only dream of from programmable blockchains with smart contracts to decentralized governance in daos from non-fungible tokens to stablecoins and d5 although dapps like uni-swap or ave are valuable in their own right they multiply that value through the ethereum ecosystem by the mere fact that they have been built on top of it okay so that's a rough overview of how ethereum captures value and why it makes a compelling investment case as it is however this is not the reason as to why people are so bullish on it that's because of what could be coming in less than six months and it's the topic of the next section in this report i'm sure you already know that i'm talking about ethereum 2.0 the long-awaited update that could completely revolutionize ethereum now there are a raft of updates that come with this but one of the most consequential is of course that move from a proof of work to a proof-of-stake ecosystem i don't have the time to talk about the differences between the two here so if you want a quick overview i have a video on that topic and i've linked to it in the top right so feel free to open it in a new tab and come back to watch it later the main benefits for the move come from the increase in scalability it's generally accepted that proof of stake systems are able to rapidly increase transactional throughput given that they don't require raw processing power to propagate however apart from the improvements in scalability this proof-of-stake upgrade could not be coming at a better time that's because of the fact that proof-of-work mining is facing increasing scrutiny from environmentalists and the mainstream media they view it as wasteful and often throw around headlines like this that are meant to scare everyone now whether this is entirely true is up for debate however you cannot deny that running a simple validator node is many times more energy efficient than relying on mining rigs like this not only that but we should also not forget that the world is going through an acute chip shortage this has hit many industries not least of which the market for gpus the main hardware used to mine ethereum if you've been trying to buy a graphics card over the past year you'll know exactly what i'm talking about here these are rarer than hens teeth at the moment now the more expensive these gpu units become the more expensive it is to mine eath and hence the more expensive it is to secure the network and finally we also have to consider the fact that ethereum is not immune to the impacts of chinese minor fud on the market while it is true that ethereum mining is less concentrated than bitcoins given that it's not dominated by asics a sizeable portion of hashrate does emanate from the country for example in may of this year we saw a collapse in eath hashrate which occurred around about the same time that we saw that chinese mining ban and in the latest chinese crypto crackdown there have been a number of ethereum mining pools that have had to close up shop in the country so the point here is that a move to a proof-of-stake consensus model is not only needed for the network but also for the long-term sustainability of the ethereum ecosystem that's not to say that it doesn't have its own challenges around centralization on the network but it's a starting point which can be built on and speaking of building on another upgrade that eth 2.0 will bring with it is of course blockchain sharding i won't go into that here but it's essentially a method where the ethereum blockchain is broken up into separate smaller shard chains that can operate independently of the main chain this means that they can execute operations and transactions in parallel if we combine the benefits of the proof-of-stake consensus mechanism with the shard chain architecture scalability could skyrocket anyways according to this research piece the potential tps of ethereum 2.0 could theoretically reach 100 000 that would be one of the fastest blockchains currently available of course if we combine that shard chain technology with the layer 2 scaling solutions like roll ups the tps metrics could literally be off the chain sorry anywho i've covered these ethereum layer 2 solutions in a bit more depth in one of my most recent videos and you know where that bad boy be at now one more update that will help to supercharge ethereum in 2.0 is the move from the ethereum virtual machine to the ethereum web assembly or ewasm the latter is designed to be faster more efficient and flexible than the evm all very helpful when it comes to building more daps and enabling developer adoption okay so that's a high level overview of the technical benefits that come from the eth 2.0 upgrades however what determines price at the end of the day is the balance between supply and demand and it was this section of analysis in the piece that was perhaps most interesting of all let's start with that supply shall we now there are so many factors that are working to hoover up that heath supply at the moment but perhaps one of the most significant is the eath that's being locked in the 2.0 deposit contract this is the eat that people are staking in the beacon chain in order to earn those staking rewards deposits to the staking contract opened in december of last year and have been exploding at the time of this video there was over 7.8 million eth locked up in this contract that's equivalent to over 23 billion dollars so why is this important well it's because eth that is locked in the staking contract cannot be withdrawn at least until we have future upgrades deployed this means that 7.8 million each have been taken off the market and won't be coming back any time soon the next supply factor that you have to take into account is a protocol defined one and that's the impact of eip 1559 ever since the london hard fork back in august we've been burning that eath base fee the total amount of heath burned since its activation stands at 431 000 eth or over 1.2 billion dollars worth given that about 811 000 death has been issued it implies that the upgrade has cut emissions by at least half however this burn rate has been picking up steam in the most recent 30 days the reduction has been over 58 in fact on some days in september especially when nft minting was going crazy we had periods where the burn exceeded the issuance what that effectively means is that on some days eth became a deflationary asset now going back to the report i want to show you this really handy graph it shows the net eath supply after taking into account the eth locked in the deposit contract as well as the eth being burned they state that since the beginning of the year each inflation has gone from 2.5 to minus 2.2 percent in september according to the piece quote it can be expected to remain low over the long run so we have those two factors which are inherent to ethereum which are reducing the supply however when it comes to supply that is most likely to impact on the price of eth we have to look at what is going on with the order books now as we know the less ether there is on exchanges the less available to buy or sell and hence a naturally positive impact on the price the supply of ethon exchanges has been falling over the past few months and according to glass node is at some of the lowest levels we have seen in years there are a number of factors that could be contributing to this but the principal one is probably defy dabbling by institutions and whales this is according to jp morgan which has observed large d5 transactional flows compared to those in the traditional crypto space and more recently they also released this global macro research report in it they talked about the difference in the basis between bitcoin and eth futures on the cme essentially in september the bitcoin futures market moved into backwardation this happens when the futures price is below that of the spot price opposite of contango this shows that institutional demand for these futures has been lackluster during september however when it comes to eth futures they are trading in healthy contango the prices of eth futures are about seven percent higher than spot when they've been annualized according to the research piece quote this points to much healthier demand for ethereum versus bitcoin by institutional investors apart from that they also have this handy chart over here which shows the position proxy for ethereum and bitcoin futures positions in the ethereum futures markets have been climbing and those in the bitcoin market have been falling now i know what some of you may be thinking guy these are futures instruments they're not related to spot supply well they are generally correlated institutional investors would be looking to hedge spot positions in the futures markets okay so that's the factors that are driving eath supply fundamentally an asset that is becoming scarcer by the day however as we know from economics 101 price is a combination of supply and demand so let's take a look at that demand given that eth powers the ethereum network the more demand there is to use the network the more demand there should be for eth as we know recent soaring gas prices have been a sticking point in the community these have been a result of a combination of a rapidly growing defy ecosystem and an nft craze now despite how frustrating this is it's an indicator of how much demand there is to use the protocol and given that gas fees are paid for in eth it means that there will be further demand to buy eth to use in transaction fees now something else that the authors looked at was the increasing retail demand for eth as i just mentioned institutions seem to be responsible for most of the investments but we still cannot ignore that retail money over here they've mapped the price of eth over google searches and twitter mentions the relationship is pretty self-explanatory now of course as we know correlation does not equal causation and this tends to be self-fulfilling i.e people will search for eth or talk about it if they see it rallying nevertheless the price itself does impact on that retail demand these types of investors are way more likely to fomo in and speaking of price i'm sure most of you are interested in hearing what effects these demand supply factors could have on it am i right well that is the next section of the report the one which takes a look at valuations the way that these researchers have looked at the value of eth is to compare it to bitcoin in the context of traditional finance valuations more specifically in their bitcoin investor guide also linked to below they used credit card companies as a reference in order to come to some sort of potential market capitalization of btc it's a pretty simple analysis but the tldr here is that the credit card companies visa mastercard etc have valuations that should theoretically be tied to the total transaction volume they process every year they assumed that bitcoin would have been able to capture all of the transaction flow in the unbanked sector 20 trillion dollars in 2017. then with a transaction volume to valuation ratio similar to visa and mastercard about 20 times they came to a market cap of 1 trillion for bitcoin this would imply a price of about 50k per btc which is not too far from where we are today anyhoo the authors claim that while bitcoin is comparable to a payments network like mastercard or visa ethereum is more akin to the global banking system quote it is the infrastructure that enables dapps and defy in the same way that the banking system enables non-linear finance involving complex transactions a pretty reasonable comparison i must say now extending that analysis the market cap of the entire banking sector is four times that of the credit card companies therefore the market cap of eth should be larger than bitcoins by the same magnitude that would imply an eth market cap of 4 trillion or about 35k per eth now of course this is just a high level analysis using some pretty rough ratios but i don't think an eth price of 35k is unreasonable at all they also use another metric in order to estimate the price of eth and that is with what they call their flow argument again they borrow some analysis from their bitcoin investor guide in which they looked at what the optimal allocation to crypto would be in global portfolios the optimal weight that they estimated for crypto was 2.27 given that the total global aum is 400 trillion dollars that would imply the crypto share at 9 trillion with the current market cap of all crypto assets sitting at about 2 trillion that would imply a 4.5 x increase from these levels extending that analysis eth has a market cap of 390 billion dollars which is about 20 of the entire crypto market cap however the authors also think that there is more chance for eth to increase its share of the global crypto market in this case up to at least one third that would therefore imply a market cap of three trillion dollars for eth or a price of 26k per each based on the current supply of 117 million so that's the lower end of their price estimate however this is crypto and we measure gains in sats in this analysis section over here they look at the price of eth in btc they think that it's likely that the eth market cap could be catching up to bitcoins the flipping now based on current supply metrics this would imply a price of 0.161 btc per eth about a 2.3 x from here they also address the question of the difference between supply inflation in bitcoin and ethereum over here now many like to point to bitcoin's protocol defined limit as a reason for its valuation and this does indeed make sense when you think about it as a currency or commodity however they say that eth is more comparable to tech stocks than currencies or gold in this chart over here they show outstanding shares of amazon over the past five years the inflation on these has averaged about 1.4 percent that's not much lower than the current eth net inflation rate and if we account for the eath being locked in heath 2.0 it's actually higher now i happen to think the comparison with amazon is a bit disingenuous one is a behemoth with billions transacted on it every day which is growing at a rapid pace and the other is an internet retailer and that's it for my breakdown of this report i've linked to it below should you want to take a look at it at your leisure the main point to take away from it is that there is still considerable upside here for eth that's based on some pretty well reasoned analysis that takes into account supply demand and established valuation multiples when you consider how much ether has rallied over the past 12 months it's not at all inconceivable that we could reach the 25k level or higher the only question is what time frame well ethereum is on the cusp of its much wanted 2.0 upgrade the next step in this process is the altair upgrade to the beacon chain that is taking place later this month then the stage is set for the proof of stake merge one of the most awaited moments in the eth 2.0 timeline this could happen as early as february next year if it all goes off without a hitch it could seriously supercharge the price of eth now i don't say parabolic that often as i'm not a fan of hyperbole but in this case it warrants it now of course i'm not blinded to the potential risks there are many of these that have also been highlighted in the piece itself things like an eth 2.0 delay increased competition from competing chains and the continuing pressure from global regulators so it is important to take these risks into account when doing your analysis i've also done so and this is the reason why i still have a relatively diversified and balanced portfolio but i won't deny institutional reports like this do bring out that eth bull in me and that's it for my video today folks but i'm keen to hear from you now so do you think these prize projections are realistic and do you have any questions for me on it i'd love to know so please fire them down below oh and while you're down there you may want to check out my socials page it's over here where i have links to all the other places that you can follow me off the tube these include my telegram insider channel for daily market updates my tic toc and instagram for behind the scenes views my twitter for announcements and other news and my weekly newsletter it's over here where i share my once weekly take on the markets as well as giving you the breakdown of my personal portfolio and it comes with a complete 100 spam free guarantee so all of that which you seek is below and finally if you think this crypto guy did a fine job well smash up that like button don't forget to hit that subscribe button as well oh and don't forget the bell so youtube can give you a bell as well i'm off to work on my next video which will be just as juicy as this one i promise so till next time folks toodaloo [Music] you

Channel: Coin Bureau

Views: 335,420

Rating: 4.9462576 out of 5

Keywords: Ethereum, ETH, Crypto, Report, Stanadard Chartered, Institutions, Blockchain, Valuation, Defi, NFTs, ETH 2.0, Staking, Proof of Stake, China Mining Ban

Id: h9QUmGJw1Ew

Length: 23min 24sec (1404 seconds)

Published: Wed Oct 06 2021

Reddit Comments

[u/lammbo_2]

For the record, I don't see us hitting 35K anytime soon but I do think our odds of breaking 10 and possibly flipping BTC in this run are reasonably high. We will begin taking profits around this level.