Citi Outlines Bullish and Bearish Scenarios for Ethereum

Ethereum may fall to $4,300 by year-end, with further risks, say Citi analysts.

By the end of the year, Ethereum is expected to fall to $4,300, with the potential for further decline under adverse conditions, according to analysts at Citi, reports CoinDesk.

A crucial factor for the price of the second-largest cryptocurrency by market capitalization is the monetary policy of the United States. Experts have identified two main targets:

• if the Fed lowers rates — ETH could rise to $6,400;
• if rates decrease — it could fall to $2,200.

According to the bank’s analysts, network activity remains a vital component of Ethereum’s value. However, most on-chain growth has been observed at the second layer, where the “pass-through” of value to the base blockchain is not entirely clear.

Currently, only 30% of L2 activity is reflected in Ethereum’s valuation, suggesting an inflated price likely due to strong inflows into ETFs and excitement around tokenization and stablecoins.

Researchers anticipate a weakening of exchange-traded fund dynamics on Ethereum, as the coin has a smaller market capitalization compared to Bitcoin and is less known among new investors.

According to SoSoValue, ETH-ETFs attracted $637 million over the past trading week.

Other macroeconomic factors will provide only moderate support. Considering that stocks are already close to the S&P 500 target of 6,600 points, Citi does not anticipate significant growth in risk assets.

At the time of writing, Ethereum is trading around $4,500, having gained 4.5% over the week.

Earlier, on September 15, Ethereum marked three years since the activation of The Merge update. Since the hard fork, the cryptocurrency’s price has risen by more than 176%.