The Ethereal (CRYPTO:ETH) The cryptocurrency has a total market value of $348 billion today. That’s more than 18% of the total cryptocurrency market, which saw $1.89 trillion as of 2 p.m. ET on Monday afternoon. Will the market capitalization of the second largest cryptocurrency hit the $1 trillion benchmark in the next three years? We’ll see.
How big would do what move should it be?
You could consider a theoretical move from Ether’s all-time high on November 8, 2021, where it was worth $4,627 per token or $569 billion in total. From there, Ether could have reached $1 trillion by rising 76% higher.
But the last three months have been rough, as investors of all stripes have shied away from high-risk options like cryptocurrencies and growth stocks. After a 40% drop, the Ethereum blockchain network token needs to gain approximately 187% to reach $1 trillion from current prices.
So we’re seeing Ethereum prices nearly triple in about three years. Historically speaking, that’s a pretty low bar to clear. The token has gained 2,260% in the last three years, for example, including that 40% drop since the November peak. Seen in a different light, Ether has gained roughly 187% in the last 13 months. Of course, the journey hasn’t been easy, but the kind of move required to get Ether to $1 trillion from here has been pretty common so far. And it was more than a rising tide across the sector that lifted all the crypto ships. Ethereum achieved this nearly tripled gain while larger pairs Bitcoin (CRYPTO:BTC) it was only up 24%, roughly in line with the stock market.
So why would Ethereum make such a big jump?
The Ether token has several major price-boosting tailwinds behind it.
- The network is making some technical changes that should end the blockchain system’s reputation for being slow and expensive. the update formerly known as Ethereum 2.0 it should be completed in 2023, with the biggest changes currently scheduled for the second half of 2022.
- Ethereum is the market leader in smart contract platforms, giving it a strong first-mover advantage over smaller challengers. Smart contracts are a crucial ingredient in non-fungible tokens (NTF), decentralized financial systems (DeFi) and other technologies called Web3.
- The domestic cryptocurrency market does not yet have a fully functional regulatory system. Legislators, consumers, financial professionals, and crypto backers are clamoring for a proper set of rules regarding taxes, trading restrictions, privacy requirements, and more. For now, your Ethereum holdings are treated like a digital version of investable assets, like stocks or real estate. Some might say that it should be viewed as an alternative currency, with a completely different set of property and tax rules. Fixing the legal framework can only be good for Ethereum and its friendseven if the actual rules turn out to be heavy-handed.
- Mass market interest in cryptocurrencies in general and Ethereum in particular has been high and steady over the past year, judging by Google Trends data. However, cryptocurrency prices tend to wax and wane along with online search volumes waxing and waning, and Ethereum hasn’t seen an increase in Google searches since May 2021. As long as public discourse returns your attention to Ethereum and other crypto names, we should see another surge in Ether prices. Any of the above points could trigger that word of mouth effect.
I wouldn’t hold my breath waiting for the legislative and regulatory processes to kick in, but the other three price impulses could go up in flames at any moment. In particular, Ethereum’s tech upgrades should come into effect no later than 2023. Some of the benefits of that event have probably already factored into the price of Ethereum tokens, but we haven’t seen the full effect yet.
So yes, I do expect the Ether market cap to exceed $1 trillion by 2025, and quite possibly by a wide margin. The Ethereum network has to grow, and investors should be able to take advantage of that building process.
This article represents the opinion of the author, who may not agree with the “official” recommendation position of a premium Motley Fool advisory service. We are motley! Questioning an investment thesis, even one of your own, helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.