The ratio of Ethereum to Bitcoin is the key. Right now the supply of Ethereum is 6 to 1. That is 120 Million Ethereum and 21 Million Bitcoin. While bitcoin supply continues to grow, very soon in June or July of 2022 Ethereum will become deflationary and the total number of Ethereum will start to drop. The number of Ethereum expected to be burned is expected to lead to a drop in the supply of Ethereum so great that by 2030 their will be 100 million Ethereum in the world. When this happens, the supply ratio of Ethereum to Bitcoin will go from the current 6 to 1 up to 5 to 1 or 1/5th. With all of the uses for Ethereum Layer 1 software as the leading blockchain L1 software protocol, worldwide crypto analyst see Ethereum going much higher. Must crypto analyst see a $200,000 Bitcoin by the end of the decade, around 2030 and if the Ethereum supply ratio gets to a 5 to one relationship to Bitcoin, then a $40,000 price of Ethereum is to be expected as the fair value at that time. Most crypto analyst call for the supply ratio of Bitcoin to Ethereum to come into balance over the next few years.
Currently Ethereum is undervalued. If Bitcoin is at $50,000 then 1/6 of that price would be $8,333, but Ethereum is stuck at $4,200, or half of that number ! Expect this ratio to catch up once Eth 2.0 comes out in 2022, as the new supply of Ethereum dries up and the demand really starts to increase. If Bitcoin can make it to $100,000 in the next 12 to 18 Months, then a $12,000 to $15,000 Ethereum would be expected, as the increased demand for Ethereum brings the current discount gap in the Ethereum Supply ratio closer into balance. This price now represents 1/12 of Bitcoin but this will start to shrink and get to its proper place of Ethereum being priced at 1/6 the price of bitcoin in the coming years. Longer term a Ethereum price of 1/5 of bitcoin should become the norm, and seen as fair value. If anyone thinks the long term price of bitcoin can get to $500,000, which is claimed as the market cap of gold, then a $100,000 Ethereum some time after 2030 could be seen. Stability of these assets will then probably come around that time. The massive price growth will probably slow greatly and stabilize near these price levels at some point in the future.
Written by Luke Myers
The opinions in this article are not financial advice. For entertainment purposes only.