Why (some) economists believe $20,000 Ethereum is a realistic price target.

I typically skim past headlines with aggressively high price targets in crypto. Feels like clickbait. However, this simple analysis from macro economist DH Taylor caught my attention.

Earlier this week, as Ethereum rose to $1,439 per coin, it crushed its previous all-time high. Taylor suggests that this is just the start. In fact, he believes that a rise to $20,000 per token is totally feasible. Here’s the hypothesis behind this lofty price target.

TLDR_

• Taylor uses Metcalfe’s Law to derive a target price of $20K per Ethereum
• Metcalfe’s Law maps the rate of growth of a network using the square of the number of its users
• Using Metcalfe’s Law, the author believes Ethereum will repeat Bitcoin’s meteoric rise
• Bullish pundits, including Raoul Pal echo this sentiment
• Mark Cuban tweeted that he owns and HODLs crypto

While a rise from $1,400 per ETH to $20,000 may sound implausible, that would represent a 1400% gain. It should be noted that Ethereum had a similar run between May 2017 and January 2018.

Mark Cuban has entered the chat_

Last week investors Mark Cuban and Raoul Pal had a lively Twitter convo discussing Bitcoin, Ether, and other cryptocurrencies. Pal has been especially bullish (positive) about the industry overall. In a thread he echoed Taylor’s price target, suggesting that Ether could outperform Bitcoin this year and hit $20,000 in the future. 

In a related thread, Mark Cuban shared his views on cryptocurrencies and decentralized finance (DeFi). In it he compared the blockchain market landscape to the Dot-com Bubble.

Let’s see what the year ahead holds for Ethereum. I’m excited about its potential. What are your thoughts?

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Earlier this week digital assets manager Grayscale purchased a massive amount of cryptocurrency in a single day. On Monday alone, they bought 16,244 Bitcoin for a total of roughly $600 million.

To put that into perspective, that equals 18 times the number of new Bitcoin mined daily.  

This gives me some real Hungry Hungry Hippos vibes_

Why this matters_

As an investor, you have two basic pathways towards adding assets (like stocks or cryptocurrencies) to your portfolio. You can:

• buy them directly, or
• buy an investment vehicle (like a mutual fund or ETF) that purchases assets on behalf of investors 

Cryptocurrency mutual funds and ETFs do not currently exist. Until they do, Grayscale’s Investment products such as Grayscale Bitcoin Trust (OTC:GBTC) are bridging the gap, allowing (accredited) investors to gain exposure to these assets without having to buy them directly.

This aggressive crypto purchasing activity suggests a high demand from its clients (institutional investors, largely), for exposure to cryptocurrencies. Grayscale assets under management grew 900% in 2020.

Takeaways_

• Grayscale provides accredited investors with diversified exposure to the cryptocurrency asset class
• Their accelerated purchasing activity highlights an upward trend of institutional demand for crypto
• Grayscale’s investment products are only available to accredited investors, so if you are a regular civilian, you need to stick to buying assets directly

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