Ethereum has been demonstrating strength again for a few days. The price is above 2,000 dollars - and a popular analyst is now issuing a price target of 20,000 dollars. That corresponds to an increase by a factor of 10. How does he come up with the bullish Ethereum forecast?
Ethereum back on track
Ethereum has been in fierce competition for a few weeks: After ETH reached a new all-time high of 4,362 dollars, the market-wide crash came - and the second-placed cryptocurrency by market capitalisation was also confronted with heavy losses. ETH lost more than 50% as a result of the downturn.
In the meantime, however, things are looking better again: Ethereum bulls were able to push the price back above 2,000 dollars in recent days, and the coin is holding steady there. ETH is currently trading at 2,159 dollars, a gain of 1.17% within 24 hours. It's nice to see green again for Ethereum - because now a continuation of the bull run also seems possible. The pseudonymous Youtube analyst from Coin Bureau believes that this will happen.
According to his estimation, Ethereum could rise to over 20,000 dollars - and that because of the booming DeFi industry. The analyst to his 1.13 million YouTube subscribers:
"Not surprisingly, banks have done pretty poorly over the last decade. From US banks to those in China, Japan and Europe, it's a miserable performance from a once superior industry. Try to imagine that: This is the sector that caused the financial crash of 2008. They have honed the craft of privatising profits and socialising losses. Yet they have not been able to create any value for their shareholders."
According to the crypto expert, the question is therefore: what services do these banks offer - and can they be replicated and offered in DeFi?
Arthur Hayes does the maths
The analyst refers to a report by Arthur Hayes, the ex-CEO of the derivatives exchange BitMEX. According to Hayes, DeFi could easily replace savings accounts or current accounts, for example. Only in the case of loans would banks still be ahead. But, according to Hayes: If Ethereum succeeds in taking a certain percentage of the average profit from banks and the four big accounting firms - then the price will explode.
Based on Hayes' calculations, the price of Ethereum would rise to more than $20,000 if the Ethereum ecosystem can subtract 0.5% of traditional finance's revenue. According to the Coin Bureau analyst, 0.5% is a reasonable estimate for DeFi.
He explains: "This prospect is precisely the reason why institutional investors are buying Ethereum (even if institutional interest seems to be waning at the moment). That is why Goldman has also gone straight into Ethereum options. The analyst emphasises that upcoming Ethereum updates will play a major role in the further price development of Ethereum. Integrating updates, however, is "no easy task" for a network worth more than 300 billion dollars.