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Should ethereum (ETH) follow bitcoin (BTC)'s former path, its price might hit USD 19,000 this year, one analyst estimated, while another one argued that ETH is now being driven by demand, and BTC - by scarcity.
Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, wrote in his latest report that bitcoin, or digital gold, has crossed the Rubicon of legitimization, while ethereum has won the adoption battle. “The mantra appears to be: "Adopt and embrace the advancing technology, or become the next Kodak, Sears or Blockbuster",” he said.
Just as bitcoin won the race to become the world's digital reserve, Ethereum won the battle to become the foundation for non-fungible tokens (NFTs), smart contracts, decentralized finance, and decentralized exchanges (DEXs). He wrote, “If growth is on the same path as Bitcoin’s in 2017, Ethereum may reach $19,000 by 2021.” On May 4, Ethereum was approximately $3,400 and more than double Bitcoin’s value 4 years earlier.
Nevertheless, the position of BTC is increasingly under pressure with the supply shrinking and demand rising, arguing the strategist, if its transition into the mainstream leads to a more subdued market. Like bitcoin won the adoption race as the world's digital-reserve asset, ETH won the battle to become the foundation for non-fungible tokens (NFTs), smart contracts, decentralized finance (DeFi), and decentralized exchanges (DEXes).
He wrote,
“If on a similar price-path as Bitcoin in 2017, Ethereum may reach USD 19,000 in 2021; to May 4, the No. 2 crypto at about USD 3,400 is more than double Bitcoin on the same day four years ago.”
If a fall in the market causes the crypto to trend downward again, it will appear to be transitioning to risk-off, and a “risk-off period”, like the one that ended in April, might serve as a good test for the Bitcoin bull market. A similar tenfold price surge weighed in at just above $100k in 2021, McGlone observed. “With Bitcoin having continued maturation, conditions aren't much different now," He said. During his previous report, McGlone argued that Bitcoin would likely reach price extremes similar to those in 2021 if he calculated the regression since the 2011 high.
At Chainalysis, Chief Economist Philip Gradwell claims that more ETH transactions are available than Bitcoin and has higher value than Bitcoin.
The 15x price gain BTC saw in 2017 was about one-third of 2013's gain, said McGlone, adding that,
“A similar fraction of the 2017 surge would translate to a price just above USD 100,000 in 2021, and other than Bitcoin's continued maturation, conditions aren't much different now.”
In his previous report, McGlone argued that "to reach price extremes akin to those years in 2021, [BTC] would approach USD 400,000, based on the regression since the 2011 high."
Demand, scarcity, and risks
Meanwhile, Philip Gradwell, Chief Economist at blockchain analysis company Chainalysis, claims that, more ETH is now available to buy than BTC. Ethereum’s use in DeFi explains the demand, he said in his latest report, but price is also determined by supply.
Around 30% of the ETH supply is in the free float, meaning that it is likely to be available for purchase on the market, while that's 13% for BTC, declining from 19% in March 2020.
Gradwell said,
"The price of Ethereum is rising because Ethereum is being used, while the price of bitcoin is rising because it is scarce. [...] So, the ETH price comes from increasing demand, while the BTC price comes from ever scarcer supply."
The 24-hour BTC trading volume now stands at almost USD 88bn, compared with ETH's almost USD 55bn.
No rewrites were found
- Is Ethereum on the brink by 2021?
- ETH price has increased faster than BTC's, so the average percentage USD gains that ETH holders have made are approaching those of BTC holders - while the average ETH was held at a loss for much of the time between August 2018 and May 2020, it now has an unrealized gain of 150%.
- In his latest report, Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, writes that bitcoin, or digital gold, has crossed the Rubicon of legitimization and ethereum has won the adoption battle.
Meanwhile, Bloomberg Wealth noted that, with a slide of about 20% in the Bloomberg Galaxy Crypto Index, there’s "notably more downside risk" to ETH than BTC. Benson Durham, a strategist at Cornerstone Macro, added that with "a rally of the same magnitude (so up 20%) you don’t really get the concomitant upside to ether compared to bitcoin. [...] Ergo the convexity, if you will, favors bitcoin."
Nonetheless, according to Cornerstone strategists, as there are diversification opportunities among digital coins themselves, a small basket of them should be considered, rather than just BTC alone, when assessing whether some allocation to crypto assets can reduce portfolio volatility alongside traditional assets.
Currently, BTC is traded at about USD 50,000, similar to USD 10,000 last year before the breakout higher. BTC is up by 5% in a week, while ETH rallied by 27.5%.
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If a fall in the market causes the crypto to trend downward again, it will appear to be transitioning to risk-off, and a “risk-off period”, like the one that ended in April, might serve as a good test for the Bitcoin bull market.
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