Why is this resident betting that the price of Ether will eventually top $150,000?

Reduced liquidity and production cuts will bring a reduction in Ether supply, while demand from the market and large companies will increase.

Written by Ke Li

The Twitter account @SquishChaos has recently gained fame for its bold prediction that the price of Ether token ETH is expected to exceed $150,000, fueled by this bull market.

In fact, @SquishChaos is a resident doctor named “Nikhil Shamapant” who graduated from Icahn School of Medicine at Mount Sinai in New York City. Of course, he is also a blockchain investor.

Why is this resident betting that the price of Ether will eventually top 0,000?

Nikhil Shamapant, Twitter handle @SquishChaos

To prove his point, he has written a long 79-page report detailing why he believes ETH prices will reach $30-50,000 in 2023 in a normal market and top $150,000 in a bull market. This lengthy report is informative and, in general, discusses in detail why Ether could reach $150,000 in 4 areas.

Pledge mining and DeFi have reduced Ether’s liquidity.

Market and large company demand for Ether continues to grow

Ether will experience 3 similar “halving” in the next 12 months

Ether is gradually accepted by the general public

Let Chain News take you through the logic behind this bold prediction.

Reduced Liquidity
Pledge mining and DeFi have reduced the liquidity of Ether. Currently, pledge mining and DeFi have locked up a total of 12% of Ether, and with the incentive of increasing returns, more and more Ether holders will pledge or liquidity mine their Ether to gain revenue, Nikhil Shamapant said, “This percentage could reach 30% in the future.

Why is this resident betting that the price of Ether will eventually top 0,000?

Data shows nearly 10 million ethers in lockdown

Of the locked Ether, the main funding is concentrated in decentralized exchanges (DEX) and decentralized lending programs.

Most of the top 10 projects on ethereum are decentralized exchanges and lending projects

Among the decentralized exchanges on Ether, the top exchanges such as Uniswap, SushiSwap, 1inch, Balancer, Curve, etc. attract most of the funding.

Among the lending projects on Ether, Compound, Maker, and Aave take up the majority of the market share.

The higher the return will attract more people to choose to pledge their Ether holdings, which will lead to lower liquidity of Ether, reduce the pressure of selling, and provide a strong guarantee for the rise of Ether price.

Increased demand for Ether
Robinhood, a famous US stock trading platform, has started to support trading of 16 digital currencies including ETH. Tesla, Paypal and Venmo have announced they are starting to buy digital currencies. Some futures companies and fund companies have already launched bitcoin futures or derivatives products, and soon these institutions will extend their services to Ether. VISA is also currently supporting trading of USDC, the dollar-anchored stablecoin published on the main Ether network.

Why is this resident betting that the price of Ether will eventually top 0,000?

Visa Announces Support for Trading USDC, a Dollar-Anchored Stable Coin on Ether

In addition, the U.S. and Canada will welcome ETFs for Ether index funds, as three Ether exchange-traded funds (ETFs) approved by Canada’s Ontario Securities Commission (OSC) went live on April 20, bringing more than $1 billion in capital flows to Ether, including Canadian asset manager Purpose Investment, which manages more than $10 billion in assets. Purpose Investment announced that the company created the Purpose Ether ETF, which will allow investors to participate in the Ether market by investing directly in physically settled Ether. The company’s website says that this will be the world’s first physically-settled Ether ETF that does not require a digital wallet, and that the company will use the funds investors use to purchase the ETF to buy real Ether and store it in an offline cold wallet.

The cryptocurrency ETF will primarily provide a compliant channel for institutional investors to deposit their funds, allowing institutional investors in traditional financial markets to participate.

Nikhil Shamapant believes that more and more companies are starting to support and buy digital currencies including Ether, which greatly increases the demand for Ether in the market, and these are favorable to the rise of ETH price in the long run.

Three times halving” is the stimulus for ETH price increase
Ether will soon implement several improvements that will have a similar effect to Bitcoin’s three “halves”.

The EIP1559 plan, which will be implemented in the Ether London hard fork on June 14, 2021, introduces a deflationary mechanism to Ether by modifying the structure of the Gas fee.

The Ethernet network has had a long history of congestion, with the crypto-cat boom causing significant congestion on the Ethernet network back in 2017, when Gas fee prices soared. Last year, due to the rise of liquidity mining and the popularity of DeFi, the financial demand for transactions and lending on ethereum skyrocketed, also causing Gas fees to rise sharply and keep hitting new highs. The high Gas fee and congested network have increased the transaction cost and limited the development of projects on the Ethernet ecosystem.

EIP1559 plans to split the Ether Gas fee into two parts: Basefee and Tips.

The basic logic is that when the utilization rate of the Ethernet network exceeds 50%, the base fee will increase; when the utilization rate of the network is below 50%, the base fee will decrease, and the base fee will fluctuate in a small range.

In addition, the miners’ tips still go to the miners who packaged the transaction information. Although the direct destruction of the base gas fee (Basefee) has caused discontent among some miners because it hurts their interests, in the long run, the destruction of the base gas fee introduces a deflationary mechanism to Ether, which effectively reduces the dumping pressure of miners.

Ether 2.0, which is expected to go live between October and November 2021, will use the POS (Proof of Staking) mining mechanism. The main objectives of Ether 2.0 are two: first, to improve the overall performance and provide a more powerful infrastructure for the development of the application layer; second, to optimize the economic model of tokens, the newly issued Ether will rely on pledged ETH, making ETH an important economic resource in the ecology.

The PoS mechanism adopts the proof-of-interest mechanism of pledge verification, which means that the running nodes need to pledge the Ether they hold, and the more Ether they pledge, the more revenue possibilities the nodes will get, on the one hand, the nodes may buy more Ether from the market for pledge, on the other hand, after the Ether is pledged, there will be less Ether circulating in the market, so the POS mechanism will reduce the amount of Ether circulating in the market Therefore, the POS mechanism will reduce the amount of Ether in circulation in the market, which is equivalent to the effect of “halving”.

Why is this resident betting that the price of Ether will eventually top 0,000?

Ether will experience similar “three halves” in the next 12 months

Nikhil Shamapant estimates that the current selloff of Ether is about 22,300 per day, which will be reduced to 15,700 per day after EIP1559 upgrade and before the implementation of Ether 2.0, and 2600 per day after EIP1559 and Ether 2.0 upgrade. From 22300 to 2600, a 90% reduction, this result is calculated by the 3 times halving formula, i.e. 50%50%50% = 12.5%.

Gradual acceptance by the general public
The intrinsic value of Ether, the explosive growth in the number of user addresses, the huge transaction volume, the lower fees, the attractive Defi and pledged mining returns, the coins supported by Ether, the massive application of NFT, the more intuitive application scenarios than gold, show that Ether has great room for growth until it receives the same attention as Bitcoin. Because of DeFi, NFT, EIP1559, Ether 2.0 more and more people will get to know Ether. Currently the search volume for Ether on Google is still smaller than Bitcoin, and one day Ether will rise and fall with Bitcoin.

Why is this resident betting that the price of Ether will eventually top 0,000?

Trends in the widespread acceptance of digital currencies such as Ether by users as time progresses

All in all, given the low liquidity caused by DeFi and pledge mining, the increasing demand for Ether from the market and large companies, the driving force of events such as EIP1559 and Ether 2.0, and the gradual acceptance of Ether by the general public, Nikhil Shamapant believes that Ether could reach a minimum price of $30,000-$50,000 by 2023. If the market keeps going well, it is possible to break $150,000.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/why-is-this-resident-betting-that-the-price-of-ether-will-eventually-top-150000/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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