Renowned technical experts and Ethereum advocates have declared that the second-largest cryptocurrency by market capitalization is significantly undervalued. This was reported by The Block, citing a report for institutional investors.
Experts believe that when comparing Ether to commodities like oil, its fair long-term price could reach $740,000.
“We need to adapt old valuation methods to fundamentally new objects. To view foundational blockchain assets as ordinary tech stocks is to underestimate their nature,” said Vivek Raman, co-founder of the newly established think tank Etherealize, in a conversation with the publication.
Comparing the cryptocurrency to “global reserve assets like oil, the bond market, and the M2 money supply” provides better insight into the “end state Ethereum is striving for,” Raman noted.
“Mass adoption will be an event on the scale of the internet’s emergence. Possibly even more significant,” emphasized the co-author of the study titled Bull Case for Ethereum.
Experts noted that Ether has taken on the lion’s share of on-chain activity “with signs of product-market fit.” Primarily, these are stablecoins and RWA — initiatives of leading asset managers and infrastructure providers.
“ETH is not just a token. It serves as collateral for the on-chain economy, fuel for computation, and financial infrastructure with income potential. It is actively accumulated, staked, burned, and spent,” the report states.
Ethereum’s Value Proposition
Experts also highlight structural features that make the cryptocurrency attractive. For instance, the implementation of the burn mechanism via EIP-1559 as part of the London hard fork set a cap on the maximum annual issuance growth rate at 1.51%. This is below the current levels of most fiat currencies.
“When you understand that the supply is limited, you have a sustainable and reliable asset […]. As on-chain activity grows, yields could decrease to much lower levels, even negative. ETH’s lag behind BTC is a temporary price distortion, not a structural issue, which opens a rare opportunity for an asymmetric bet,” Raman emphasized.
Amid Israeli airstrikes on Iran, Ethereum’s price fell by 8.2% in a day, according to CoinGecko. The asset is trading around $2532 — 48.3% below its ATH, reached in November 2021 near the $4878 mark.
Despite this, the report’s authors are confident that Ether has the “short-term” potential to reach $8000; eventually $80,000, if used as a reserve asset and commodity.
The number of investors accumulating Ethereum continues to grow, similar to how Michael Saylor’s Strategy accumulates Bitcoin. For instance, the “strategic ETH reserve” supported by Joseph Lubin holds assets worth approximately $2 billion, and the largest blockchain applications and related DAOs hold tens of thousands of tokens.
However, not everyone shares the confidence that Ethereum will eventually become a reserve asset. Analyst and DBA co-founder John Charbonneau, despite an optimistic view of the project, believes that even now Ether is overvalued and does not recommend buying it.
The report’s authors themselves acknowledge that while “the narrative around Bitcoin is institutionally accepted,” investors may find it more challenging to assess Ethereum’s intrinsic value.
In June, spot Ethereum ETFs outperformed Bitcoin-based funds in daily capital inflow.