The world’s second-largest cryptocurrency Ethereum (ETH) made a strong move this week above $3,000, outperforming Bitcoin once again. As the ETH price currently trades around $3,100, analysts are hopeful that the ETH price can surge further this year in 2022.
Bloomberg analyst Jamie Coutts believes that the ETH price can touch $6,100 levels based on the discounted cash flow model. The analyst notes that the Ethereum cryptocurrency enjoys a “unique blend of equity, commodity and monetary characteristics.”
Coutts is bullish about ‘The Merge’ of the execution layer and the consensus layer. This will allow users to stake their ETH and earn income out of it. A staggering 30% of the Ethereum transaction fees will be distributed to the stakers.
Thus, growing demand for ETH will further lead to higher fees and higher payout. As per its current performance, the Ethereum network is poised to generate $12.7 billion in fees in 2022.
Another market analyst Ryan Allis, who runs a crypto quant hedge fund, believes that ETH market valuations are worth $832 billion, as per discounted cash flow model. He states that the Ethereum transaction fees in January 2022 surpassed $1.3 billion.
Allis also explains that Ethereum’s revenue in February 2022 stood at US$715.4 million. As per this calculation, the annualized revenue should stand at US$8.58 billion. As per the forecast, the annual staking reward will stand at US$1.4 billion. This will increase the total annualized revenue to US$9.98 billion. Allis explains that net profits are equal to revenue i.e. 100% profits since no costs are associated with a distributed system.
Thus, we can assume that ETH is trading at a forward price-to-earnings multiple of 36.6. This is quite attractive considering the steep multiples that growth stocks are trading. If we take a forward P/E ratio of 100, ETH prices will surge to more than US$8,300.
Allis also assumes an annual revenue growth rate for ETH at 25% for the next 20 years. This puts the intrinsic value of ETH at $7,000.
Ethereum (ETH) Whale Addresses Supply
The holdings by the top 10 Ethereum whales continue to rise and have once again reached closer to the 5-year high. On-chain data provider Santiment noted:
Ethereum’s top 10 #whale addresses hold 4.3% more of the total supply than they did one year ago today. The 23.7% of all $ETH held by these wallets remains very close to the 5-year high levels that it first breached in late January.