Analyst says Ethereum is ‘massively undervalued,’ despite recent ATH

Ethereum

Ethereum recently climbed to an ATH of over $ 4,440. And at the time of going to press, ETH was still hovering above the $ 4,300 levels. While many consider this to be strong levels, analyst Lark Davis argued that Ethereum is massively undervalued in his latest podcast.

Five events to consider

Speaking in the context of Ethereum’s use case on social media platforms, Davis made a few key observations. Not so long back, Reddit had launched its community tokens on the Ethereum platform.

Recently, Reddit hinted at an NFT launch. Davis noted that his community of “430 million monthly active users” is now likely to use the Ethereum platform for its launch. Similarly, he expected that even Twitter will have to “enable Ethereum-based verification” for its NFT platform.

Let’s also not forget that TikTok, with billions of users, has already launched its creator-led NFT collection on the second-generation blockchain. Another similar announcement can even come from Facebook, expected Davis. The platform with “2.8 billion monthly active users” might take a “multichain” approach for its upcoming metaverse plans.

However, Facebook’s NFT plans could give Ethereum a boost again. Additionally, Facebook’s Novi wallet’s wide adoption down the line is also something that needs to be focused on, from the point of view of Ethereum.

From NFTs to ETFs

Moving on to what has been seen as an industry-wide victory is the launch of Bitcoin-focused ETFs. Naturally, Davis and other investors expect an ETH ETF to be next. It should be noted that Canada has authorized Bitcoin and Ethereum ETFs. Davis noted that this could be the next thing in the US market.

Institutional interest

As per CoinShares’ weekly report, Ethereum saw outflows for a third consecutive week totaling $1.4 million as of 25 October. Despite the profit taking, the institutional interest of ETH remains strong.

Previously, JP Morgan analysts had noted that institutions are even preferring Ethereum over Bitcoin. Davis also explained that a “range of different actors, from public companies to private funds, family offices, etc.” consider Ethereum to be an asset to invest.

Further, with the demand spiking, the available supply of Ethereum on central exchanges has gone down by 18%, which is close to 4 million ETH. And this trend has taken place over the past five months.

Additionally, a report noted that Ethereum’s current burn rate after London hard fork is around 5 ETH/min. With over 700,000 tokens burnt, Ethereum’s point-of-sale merger is also not far away after its Altair update. With the reduction in mining rewards, Davis said,

“Ethereum is going to have an annual negative supply rate of around minus 2%.”

That said, Goldman Sachs’ Bernhard Rzymelka recently predicted that the price of ETH would double by the end of the year.

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