Ethereum could pave the way for Bitcoin to hit $100,000, says Bloomberg analyst

Ether (ETH) outperformed Bitcoin (BTC) in terms of YTD market performance, up more than 320% against BTC’s 54% returns. But according to senior commodities strategist at Bloomberg Intelligence Mike McGlone, Bitcoin would soon catch up with Ether, which could even push its price per unit to $100,000.

“If Bitcoin caught up with Ethereum this year, the price of the #1 cryptocurrency would approach $100,000.” tweeted the analyst on August 9, when the price of BTC surpassed $46,000.

Bitcoin performance vs Ethereum performance (2021). Source: Bloomberg Intelligence

While McGlone didn’t focus on the factors that would make Bitcoin equal Ethereum’s annual earnings, his previous cryptocurrency report cited some catalysts that could boost benchmark cryptocurrency prices for the six-figure club. The report notes:

“Around 80% of Bitcoin and Ethereum, most of the Bloomberg Galaxy Crypto Index (BGCI) performance comes from the broader perception of the first-born cryptocurrency as a global digital reserve asset, plus the accelerated digitization of fintech and the currency system .”

trillions of dollars waiting on the sides

Bitcoin supporters believe it can compete with the US dollar to become a global reserve asset. One big reason is the cryptocurrency’s fixed supply limit, which, for proponents, makes it a better currency than the dollar (the Federal Reserve printed $3.1 trillion in 2020 alone).

As a result, Bitcoin closed last year 260% higher, reflecting investors treated it as a tool against dollar-driven inflation.

Bitcoin price performance in recent years. Source: TradingView.com

In its research in early 2021, Goldman Sachs also looked at pent-up demand for Bitcoin among institutional investors, including pension funds, global sovereign wealth funds and foundations. However, even with trillions of dollars in reserves, the lack of clear cryptocurrency regulations prevented accredited investors from placing these funds in the Bitcoin market.

Analysts at Autonomous Capital Management said a regulated exchange-traded Bitcoin fund would accelerate Bitcoin adoption among institutions. Furthermore, they said that while investors treat Bitcoin as a highly volatile asset, its lack of correlation with traditional risk factors will be like music to their ears.

Independent analysts added:

“If we were to assume that Bitcoin has the same weight as the current weight of gold in investors’ portfolios, its price would be 2.8x higher, or about $112,000.”

Ethereum Rivalry

Despite its prospects for adoption on Wall Street, Bitcoin’s dominance dropped dramatically after peaking at around 73% in December 2020. It now stands at 47.17%, reflecting traders have shifted their investments to other digital assets.

Ether, in particular, became the biggest benefactor of the decline in Bitcoin’s dominance index. Its own dominance in the cryptocurrency industry has risen from 10.06% in December 2020 to 20.05% at the time of this writing.

Ethereum’s dominance index nearly doubled in 2021. Source: TradingView.com

Part of the reason behind Ether’s growing dominance stems from the explosion of non-fungible tokens (NFT), which are digital files whose originality and scarcity can be validated by a public ledger.

Furthermore, a boom in the decentralized financial space, consisting of loans and other financial services built on the blockchain Ethereum, has spurred the adoption of Ether among the cryptomas.

Ethereum developers are also taking steps to scale the blockchain. On August 5th, Ethereum updated their software with the so-called hard fork London with the aim of becoming a full Proof-of-Stake protocol in the future.

The update also added deflationary pressures on supply, with a proposed EIP-1559 improvement bringing a rate-cut feature. On the first day alone, EIP-1559 enabled the elimination of $2 million in Ether tokens.]

On Monday, the resource burned about $5.5 million in ETH, according to data obtained by website Ultrasound Money.

McGlone noted that Ethereum’s past performance indicates possibilities that it could outperform Bitcoin in terms of market capitalization by 2022 or 2023. The analyst maintained its $100,000 price target for Bitcoin, however.

Ethereum’s market capitalization designed to match Bitcoin by 2023 at the latest. Source: Bloomberg Intelligence

“Although we see Bitcoin in this path, it seems that little can stop Ethereum’s flippening process,” he said.

So far, Ethereum has surpassed Bitcoin in terms of network transactions and total transaction fees, data from the Blockchain Center show.

The views and opinions expressed herein are those of the author alone and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you must conduct your own research when making a decision.

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