Key Insights:
Ethereum has seen the start of whale accumulation with a single whale buying $59 million worth of ETH.
The buying could take Ethereum out of its undervaluation.
Ethereum plays a central role in DeFi and crypto markets with almost all of the DeFi platforms dependent on it.
Fair value estimates by experts range between $5,000 to $20,000 for ETH.
A mysterious whale has accumulated 7,395.5 ETH at the price of $23 million. In the last 3 days, the same whale has accumulated 18,049 ETH worth over $59.35 million.
It may seem that whales buying ETH at the current pricing are doing so at a at elevated levels because markets are at an ATH. Yet, they are buying Ethereum at a very cheap price. This is because, at present, Ethereum is highly undervalued and, in the near term, is expected to cross $10,000. A detailed explanation is provided in the later sections of this article.
Ethereum Price Trends in the Last 7 Days
CoinMarketCap
There are several reasons why Ethereum is highly undervalued at current levels. First, Ethereum has several upgrades planned in the next two years. Second, Ethereum's price has seen uncertainty due to the Biden administration's crypto policies. Third, Ethereum's ETF have been performing a lot worse than expected. Fourth, ETH prices are also suppressed due to the greater attention received by the memecoin markets.
Ethereum has planned several upgrades in the near future. Its last upgrade, Dencun, was immensely successful in reducing the gas fees on the blockchain. As a result, transaction fees and revenue crashed in the second and third quarters of 2024, causing volatility in ETH prices.
Secondly, the Biden administration left a serious dent in the crypto markets. Almost all major cryptocurrencies and crypto projects are either under investigation or under the SEC scanner. This has caused uncertainty in ETH's price as most of them contribute to ETH's revenue.
Thirdly, Ethereum ETFs have been performing much worse as all institutional attention is currently focused on the Bitcoin ETFs. Also, the comparison of Bitcoin with Gold has led investors to understand it better than Ethereum, which is a bit more complex. This has resulted in the overshadowing of Ethereum ETFs by those of Bitcoin.
Fourthly, the memecoin markets led by Solana memecoins have overshadowed ETH memecoins. Among major cryptos in this sector, only Pepe is based on Ethereum. Dogecoin has its own chain, Shiba Inu is majorly based on Ethereum but has been transitioning to Shibarium and rest other are mostly on Solana.
Etheruem still functions as the largest blockchain in terms of DeFi and outranks any other competitor by a huge margin. ETH's DeFi market share is at $60 billion out of $109 billion.
The next largest competitor, Solana, has a DeFi presence of only $8 billion at press time. This is because the remaining $50 billion of DeFi market share is mostly divided between Layer-2 chains, all of which are, in turn, dependent on Ethereum.
In the next couple of years, as ETH scales to higher transaction rates, it will become much cheaper, perhaps virtually free. At that point, we assume most L2 users will find it far more attractive to use Ethereum, which is much more secure than any other blockchain in this space.
Several new-age applications, such as crypto-based liquidity funds (essentially RWAs) and decentralized Physical Infrastructure Networks (DePINs), have emerged. The top players in both spaces are built on Ethereum.
In the RWA space, Ripple's XRPL and Solana have significant presence, but both look insignificant when compared to Ethereum's share in these markets. The largest of such RWA-based liquidity funds issued by BlackRock, BUIDL, is based on Ethereum, which has a minimum investment value of $5 million.
Ethereum also hosts a major player in the DePIN markets: Render. The project provides a decentralized GPU-sharing platform that is expected to play a critical role in the future of AI-based innovation.
Finally, a critical point to remember is that Ethereum provides the base layer infrastructure for almost all of the DeFi markets. This base layer infra includes Layer-1 support for more than 42 Layer-2 chains and asset standardization support for Tron whose TRC-20 coins are derived from Ethereum's ERC-20 token standard.
This means that Ethereum directly and indirectly commands control over $103 billion of market share in DeFi out of a total $110 billion.
This also means that if, someday, Ethereum makes itself incompatible with Tron or any other L2, the latter could lose all of their on-chain stablecoins (where ETH still dominates the markets) and their on-chain TVL to Ethereum.
Ryan Sean Adams, the co-founder of Bankless estimates the fair value of Ethereum at $10,000.
Ethereum is moving under a wedge pattern which, when it breaks out, could move its price towards $5500.
Another professional investor, Julien Biitel (CFA), estimates that ETH will be worth $20,000 by 2025.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.