Ethereum’s Robust Growth Trajectory: Why ETH Should Be Part Of Your Crypto Portfolio

2021/10/07 12:00:00

Ethereum is perhaps the most significant blockchain project from a development point of view. Bitcoin is attractive to investors because it is a scarce store of value. However, ETH can also be considered a store of value given its rarity but it is more appealing considering that it is the base layer on which many decentralized crypto projects have already been built.

ETH's ability to double up as a store of value and a fat protocol layer is perhaps one of its most attractive aspects. Standard Chartered analysts also believe so, as highlighted in a report called the Ethereum Investor Guide they released last month. ETH’s value is not just because of its limited supply but also because of the demand for the cryptocurrency courtesy of all the dapps launched on the Ethereum network.

How demand and network usage will contribute to ETH’s price

The dapps use ETH as fuel to power their operations and this works out well for the network because most of the value trickles down the protocol layer. However, the biggest growth driver is Ethereum 2.0 which will revolutionize how Ethereum functions. Once the transition is complete, the network will be able to scale up much more easily and this will allow it to capture more value over time. However, the transition will attract growth from multiple aspects. For example, more investors will want to benefit from ETH through staking since Ethereum 2.0 is a proof-of-stake network.

Staking will contribute to higher demand for ETH while the upgrade will also enable the network to increase its efficiency and transaction speeds. Another major consideration for ETH's value is that it is now deflationary thanks to the EIP-1559 upgrade. Deflationary characteristics contribute significantly to the value of a cryptocurrency. The less ETH available in the market, the more it continues to gain value, especially when combined with organic demand.

The impact of external factors on Ethereum

Ethereum’s network usage has been growing at an exponential rate and this has resulted in some challenges such as expensive fees and TPS limitations. However, those challenges highlight the strong demand that the network has achieved so far. Many other networks may challenge Ethereum but the upgrades that the network will go through this year will help it to compete more effectively against the growing competition.

Ethereum still has the first-mover advantage as far as smart contract blockchain networks are concerned and this advantage has consistently made it the preferred network for dapps and NFTs. Ethereum 2.0 will turbocharge the network’s growth, allowing it to secure a strong position in the decentralized world.

Tokenomics analysis

The cryptocurrency market is still in its early stages and Standard Chartered analysts expect continued robust growth in the future. ETH currently has a market cap of just over $420 billion and this figure is expected to reach $1 trillion or more in the future, possibly within a few months from now if Ethereum 2.0 leverages the anticipated growth. If combined with the deflationary characteristics, it makes the argument for ETH prices above $10,000 more reasonable. Such a price would represent a significant gain from the current price of $3,567 at the time of this press.

Patrick Smith United States

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