ARK Invest, the American investment firm led by Cathie Wood, has published a new research report with some very bold predictions. The report “Big Ideas 2022” paints quite an optimistic picture for both Bitcoin and Ethereum, predicting that the price of BTC will surpass $1.4 million by 2030 and that the market cap of Ethereum could exceed $20 trillion.
Earlier this year, predictions of one billion crypto users by 2023 were already met with a degree of uncertainty. However, talking about the price of the largest crypto multiplying by over 26X is on an entirely different level.
Bitcoin: Dissecting the $1.4 million price prediction
In 2021, Bitcoin’s cumulative transfer volume increased by 463% – going from $3.2 trillion in 2020 to $18.2 trillion AUD the following year, which surpasses Via’s $12.1 billion that they settled in the same year.
All this is to say that although Bitcoin has seen better days, it’s by no means dying. Now let’s get to breaking down ARK’s predictions.
Adoption from other nations
Currently, 8 percent of Bitcoin’s supply is held by ETPs, corporations, and countries. The latter is the first major point we’ll cover. ARK analyst Yassine Elmandjra proposes that Bitcoin is currently still only a fraction of its potential and will scale as it sees more nation-states adopting it as legal tender (think El Salvador).
El Salvadoran president Nayib Bukele, Devere Group CEO Nigel Green, and Bitmex CEO Alexander Höptner, all support this sentiment, each believing that more sovereign nation-states will accept Bitcoin as legal tender this year.
There’s also a strong possibility that the island nation of Tonga may accept Bitcoin as legal tender later this year, becoming the second nation to do so.
Cleaner Energy Consumption
The research suggests that Bitcoin mining could actually benefit the energy industry as it incentivises cleaner solutions. This is understandably controversial, given that Bitcoin mining machines around the world consume about as much power per year as entire countries.
The ARK analyst acknowledges the concerns raised about the energy output involved in Bitcoin mining but believes that mining may encourage and generate more electricity from renewable carbon-free sources.
They cite that energy sources like wind and solar could meet a larger percentage of grid demand if Bitcoin mining impacts the utility grid.
Source: ARK Invest
Ethereum: 68X Increase – Surprisingly plausible?
Ethereum currently has a supply of approx. 120 million, and once ETH 2.0 goes live, it’ll be expected to burn about a million coins each year – which would put the supply closer to 110 million by the end of the decade. This means that if ARK’s prediction pans out, each ETH would be worth $250,000 AUD.
For perspective, this would mean that anybody purchasing Ethereum at the current price (approx. $3,700 AUD) would make a return of 68X. ARK makes several compelling arguments as to why this prediction is justified, let’s break it down.
Displacing Traditional Finance
The main justification proposed by ARK is Ethereum’s potential to displace many traditional financial services and possibly compete as a global currency (referencing Ether, which is Ethereum’s native token).
This prediction is based on the utility and efficiency that the Ethereum network possesses. From DAOs to NFTs, the blockchain underpinning Ethereum has provided more interoperability, transparency, and financial functionality than ever – with minimal intermediary fees and counterparty risk. ARK also estimated that DeFi had outperformed TradFi over the past year in terms of revenue, by a factor of 10X.
Source: ARK Invest
Fees are decreasing, while support is increasing
The final case for Ethereum is the fact that the cryptocurrency’s fees have dropped (along with its price), giving more incentive than ever to make transactions with Ethereum.
“Ethereum’s average network fees have dropped to the lowest value in 30 days at 0.0096 ether or $24.64 per transaction,” a Bitcoin.com article says. “Median-sized Ethereum fees are lower today as well, as fees are between $8.37 to $10.82 per transaction as ether fees haven’t been this low since January 1.”
But that’s not all – while fees are lower than ever, support for the Ethereum platform is growing. One example of this is Etherscan, an application that enhances the Ethereum blockchain network’s accessibility to the masses. It achieves this by keeping track of blockchain transactions on the network and then allows users to find details of said transactions through a search engine of sorts, giving users peace of mind when their transferred funds haven’t yet appeared in their wallet.
Between the combination of these factors, there hasn’t been a better time for new users to transact with Ethereum.