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Ether Could Surprise to the Upside in the Coming Months, Coinbase Says

May 16, 2024
  • Coinbase said ether has the potential to surprise to the upside in the coming months.
  • The cryptocurrency unlikely to be displaced as the center of decentralized finance, the report said.
  • The market may be underestimating the timing and odds of a potential approval of a U.S. spot ether exchange-traded fund.
As an experienced analyst, I believe Coinbase’s assessment of ether’s potential upside is a compelling case. Ether’s underperformance in 2023 relative to bitcoin and the broader crypto market may be attributed to temporary factors rather than long-term fundamentals. The cryptocurrency’s strong positioning in decentralized finance, as well as its growing sinks of liquidity from staking and layer 2 growth, underscore the unique value proposition of ether.As an analyst, I would rephrase that as: This year, Ether (ETH) hasn’t kept pace with the broader crypto market’s growth. However, its long-term prospects remain robust, and it could potentially deliver unexpected gains. Coinbase shared this perspective in their research report on Wednesday.
The second largest cryptocurrency in terms of market capitalization has experienced a 29% increase so far this year. This growth trailers behind bitcoin (BTC), which boasts a more substantial surge of 50% over the same period. The CoinDesk 20 Index, a benchmark for the crypto market as a whole, has registered a 28% advancement.

The report hinted that Ether could see unexpected gains in the next few months. Notably, it lacks significant pressures from supply side factors like unlocked tokens or miner-initiated sales.

Contrary to some beliefs, staking and layer 2 growth have been significant and expanding sources of Ethereum (ETH) liquidity, according to analyst David Han. The role of ETH as the hub of decentralized finance (DeFi) is not expected to be usurped by others in our assessment, given the extensive use of the Ethereum Virtual Machine (EVM) and its advanced layer 2 solutions.

The Ethereum Virtual Machine (EVM) represents Ethereum’s internal processing engine, enabling developers to construct smart contracts while permitting nodes to engage with them. Layer 2 platforms signify separate blockchains that operate above the primary layer or base layer, alleviating constraints related to scaling and data handling.

Additionally, the significance of prospective Ether U.S. exchange-traded funds (ETFs) should not be disregarded. According to Coinbase, there is a strong possibility that regulatory approval may come sooner than anticipated, potentially leading to unexpected positive developments.

If the initial rejection of the May 23, 2024 deadline occurs, there’s a strong chance that litigation may overturn this decision. In the meantime, we’re confident that Ethereum’s underlying demand factors and technological advancements within its network will allow it to maintain its presence across various narratives.

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2024-05-17 13:17