Originally published on: March 04, 2024
The Ethereum network has seen remarkable growth over the years, with its price soaring by 128% in the last 12 months and an impressive 804,027% since its inception. Despite this exponential growth, could Ether’s price still see a massive 17x increase from its current trading value?
According to Brian Russ, the managing director of BMO Financial Group in Colorado, the answer is yes. Speaking at ETHDenver, Russ discussed how traditional finance models can be applied to value blockchain networks and their tokens.
Russ’s valuation methodology encompasses various models, including discounted cash flow, precedent transaction, market comparables, and Metcalfe’s Law. Taking Ethereum as a case study, he projected future profits based on wallet growth, with the network’s wallets increasing at a rate of 36% annually for the last 5 years.
By estimating that half the global population could be using Ethereum by 2033, Russ derived a future value of $458 billion for the Ethereum blockchain. Comparing Ethereum to early-stage tech companies and other layer-1 projects, he concluded that Ethereum is undervalued.
Using a weighted average of the models, Russ predicts an implied value of $345 billion or $2,875 per Ether. While this may not excite investors looking for rapid gains, Russ suggests that patient investors could see a 17x return on their investment by 2033.
Russ’s analysis provides a deeper understanding of Ethereum’s current value and its potential future growth, giving investors insights into possible arbitrage opportunities. With the network’s continued expansion and adoption, the future looks promising for Ethereum and its investors.
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