The British bank’s research team Standard Chartered started covering the cryptocurrency market. Its first reports cover the two biggest cryptos, Bitcoin and Ethereum, which could have significant highs later this year.
The SC study puts Bitcoin at a price of $120,000, about 627,000 reais at the current price, in 2040. This figure was based on the government’s high printing of money compared to controlled, and increasingly smaller, printing of bitcoin.
This characteristic of Bitcoin places it as one of the best options for storing value in the world.
Bitcoin at more than BRL 500 thousand in 2021
Although gold is also scarce, as its price increases more investment will be made in extracting the metal, meaning more gold will be mined, which can cause a price equilibrium as there will be more supply.
In Bitcoin, the entry of more BTC in the market is limited, and it decreases by half every ~4 years, regardless of its price.
Following this thinking, the SC team compared the increase in bitcoin price after each halving (halving the generation of new coins).
Since the last event that took place in 2020, Bitcoin has risen only 6x, a very small value when compared to 28x growth after halving 2016 and 93x growth after 2012.
Post-halving price spikes occurred about a year and a half after the event, this could cause bitcoin to reach $100,000, 523,000 reais at the current rate, this year or early 2022. Having a 12x multiplier, still quite low when compared to the previous ones.
Of the 21,000,000 BTC, only 2,185,363 are left out of the market. About 10%.
Bitcoin vs Ethereum
Although similar, the two largest cryptocurrencies have several differences. While Bitcoin is seen and used as currency and store of value, Ethereum is a global supercomputer that handles smart contracts.
The adoption of BTC rather than ETH in El Salvador is a good example of this. The printing of new ETH, without halvings or fixed plane, puts it at a disadvantage compared to BTC.
Another great advantage of Bitcoin, over all others, is that it was the first cryptocurrency to establish itself in the market. Its 12 years of existence prove, more and more, its security.
Ethereum at R$180,000 in the long term
According to the SC report, the Ethereum can reach the value of 35,000 dollars, 183,000 reais at the current price. However, for that to happen, the price of bitcoin must reach 175,000 dollars, or 915,000 reais.
This calculation was based on the allocation of cryptocurrencies in 2% of global portfolios and taking into account possible protocol improvements with the migration to Proof-of-Stake (PoS) that will occur with the so-called ETH 2.0.
These improvements can include less generation of new coins, as well as scaling the project in transaction-per-second capacity.
While Bitcoin is dominant in the payments industry, Ethereum explores other markets due to its ability to run smart contracts.
Ethereum has managed to create a strong ecosystem around itself, and each project orbiting Ethereum ends up causing more people to buy the ETH token.
While on Bitcoin, many people buy and holdam their coins, on Ethereum many people end up buying ETH to use apps created on top of it.
These apps, or dApps (decentralized apps), take on new shapes every day. Decentralized Autonomous Organizations (DAOs), NFTs, ICOs, and Decentralized Finance (DeFi), all of these sectors drove the price of Ether, each in its own time. In addition, it is very likely that Ethereum will have another use case, not yet studied, in the future.
Just as Bitcoin has the advantage of being the first cryptocurrency, Ethereum has the same advantage over its competitors that work with smart contracts and even EVM (Ethereum Virtual Machine) as the Binance Smart Chain.
Despite its high transaction fees, especially on more complex tokens, Ethereum is the currency of choice for developers and users.
This makes Ethereum a complement to Bitcoin, and not a direct competitor like other cryptocurrencies like Litecoin (LTC) and Monero (XMR).
Price estimates for both Bitcoin and Ethereum by British bank Standard Chartered seem quite possible.
A country’s adoption of Bitcoin and the continued growth of solid new projects on Ethereum may just be the beginning of a more decentralized, code-supported world.