A key Goldman Sachs strategist predicted an incoming 80% swell to Ethers price within two months. He notes this swell depends on Ethereum following its trend that coincides with rising inflation expectations.
Bernhard Rzymelka, the global markets manager of Goldman Sachs, sees strong potential for Ether to rally higher in the next two months. Ether is the cryptocurrency of Ethereum network. If the said rally occurs, it will propel the token to an evaluation of $8000 with an estimated astounding Trillion dollar market cap.
Ether, just this past week, has broken new ground in that direction. It made its move from $4460 at the time of Goldman’s statement, edging over $4800 before correcting to $4600, where it trades currently.
Two aspects of inflation influence.
Let’s note the starting point to inflation is the devaluation of traditional currency, otherwise known as Fiat.
In the current climate we live in, mid to hopefully post-pandemic, the necessary financial stimulus previously provided to sustain economies is now showing its repercussions. Excess funds cause prices to rise in an attempt to match the lesser value of Fiat.
The first aspect is higher liquidity, meaning those same funds now circulate in the market and search for suitable investments, especially as businesses begin to recover.
Goldman has noted the collective crypto market and Ethereum to be a good match for those funds in the past years. He stated this is part of Ethers overall pro-cyclical trend, i.e. positive economic growth equaling positive Ethereum growth.
The second aspect of inflation is a heightened awareness of employing necessary economic strategies. The private consumer feels pressure of inflation in the simple things of livelihood prices. In contrast, on the institutional level, higher inflation means the value of profits diminishes in greater scheme of things.
This heightened awareness of economic pressures due to inflation places long term financial goals at the forefront of personal and institutional planning.
Enter Crypto, enter Ethereum.
Other proponents to potentially propel Ether higher in the coming months
One of the reasons Ethereum may be an excellent match to combat inflation is that Ethereum is in the process of transitioning to Ethereum 2.0.
As part of this transition, Ethereum is changing the protocol from inflationary to deflationary.
The previous rendition would mint new coins and reward them to miners that secure the network. Ethereum 2.0, however, burns coins as part of its transaction fee structure.
Imagine if the federal reserve decided that it will no longer print dollar bills but rather buy back bonds continuously for the foreseeable future and legislate accordingly. Dollar prices would only have one direction to go, and that is up. That looks to be the future of Ether.
Another potential positive proponent is the hope that Etherum will see an ETF approved shortly.
Bitcoin in the past month has just seen several ETFs approved and deployed; many see this as opening the door to an Ethereum ETF as well. As stated above, this would allow significant ease of access for institutions looking for suitable investment to their heightened financial liquidity.
Will inflation be the constant push to rising Ether prices?
Goldman states that Ether could rise to $8000 according to his 80% growth projection. Although there has been a strong correlation, there is also the possibility that banks will succeed at reeling in inflation, cutting the motif to this narrative.
More so, the remaining question of crypto volatility remains a drawback as a stable hedge against inflation.