KEY POINTS

  • Fundstrat believes Ethereum is the best risk/reward investment play in cryptocurrency
  • Fees are expected to surpass 2020 total
  • Ethereum 2.0 and decentralized finance continue to play a major role in the narrative surrounding the blockchain

Ethereum’s price is poised to reach $10,500, according to Fundstrat Global Advisors, on the back of the growth surrounding decentralized finance, fees and inflow from institutional investors.

Fundstrat said its target price of $10,500 is fueled by Ethereum continuing to power more real-world applications, including smart contracts, stablecoins and decentralized finance apps.

“We continue to believe Ethereum fundamentals are incredibly strong and we think it represents the best risk/reward investment play in crypto,” Fundstrat said in a note to investors obtained by Yahoo Finance.

Another thing that is going well for Ethereum is the transaction fees. In the Ethereum blockchain, every activity must be paid in what is called “gas fees” or “Gwei.” Fundstrat said gas fees in the Ethereum blockchain totaled $600 million in 2020, and for the period of Jan. 1 to 17, fees are already at $180 million.

This means fees on Ethereum could total as much as $3.9 billion this year. The firm said as more developers tap into Ethereum, the more likely fees will increase.

Decentralized finance, a new kind of financial activity where everyone can borrow, lend, save or deposit without any human intermediary, is a major factor for the bullish sentiment for Ethereum. At the time this article was written, the total value locked in decentralized finance is $23.42 billion, as per the data on DeFi Pulse.

As for the risks, Fundstrat cited a potential cryptocurrency bear market or setbacks in the pending network upgrade called “Ethereum 2.0,” meant to increase transaction output in the blockchain while at the same time put the power away from the miners and into the validators, Bloomberg reported.

Still, according to Yahoo Finance, the boom and bust cycle of the cryptocurrency sector should be taken into account by investors. Additionally, a lot is going on for Ethereum when compared to Bitcoin, whose primary narrative is that of a “store of value.”

Ethereum closed Wednesday at $1,376.

Ethereum and Dollar Photo Secure your digital assets responsibly Photo: Pixabay