Former Goldman Sachs executive Raoul Pal has revealed he believes Ethereum is the “greatest trade” setup that he has ever seen as the cryptocurrency’s fundamentals suggest it has a large upside ahead of it.
In a recent interview, first spotted by Daily Hodl, Pal revealed that Ethereum’s fundamentals are forming, in his opinion, a better setup than the one Bitcoin had in March 2020, when its price plunged over 50% to $4,000 before it recovered. Since then, the price of BTC surged to hit a new all-time high near $64,000.
While the flagship cryptocurrency endured a massive correction after hitting its new all-time high, it’s still trading above $45,000 according to CryptoCompare data. Pal’s words, as such, suggest he believes Ethereum could move up over 10x, from its current $3,000 level.
Pal said that around 13% of Ethereum’s free float is currently available, while everything else is “being staked, locked, and hoarded.” This, he says, reduces the supply of available ETH – something he says has been steadily happening.
Addressing the rollout of Ethereum Improvement Proposal (EIP) 1559 on the network’s London hard fork, he said most people are now going to start staking their ETH ahead of the launch of Ethereum 2.0, to the point there’s no more ETH supply available to meet demand.
He added:
Exponential demand meets fixed supply equals exponential price rise. One of the best setups I’ve ever seen.
EIP-1559 has introduced a transaction fee burning mechanism to the cryptocurrency’s network, designed to make fees easier to use and help it deal with high demand. Ethereum transactions now require a base fee to be burned, and users can tip miners if they want them to process their transactions faster.
The base fee rises when there’s higher demand, and lowers when demand drops. According to a burn tracker, over 17,600 ETH have been burned at press time, with a burn rate of about 2.81 ETH per minute. Around 5.5 ETH are being minted every minute.
As CryptoGlobe reported, Raoul Pal has in the past revealed he believes the price of Ethereum (ETH), the second-largest cryptocurrency by market capitalization, could go to $20,000 “this cycle,” based on Metcalfe’s Law.
Metcalfe’s Law, it’s worth noting, states the effect of a network is proportional to the square of the number of nodes in said network. Pal added charts showing that Ethereum’s growth is very similar to that of BTC and that Metcalfe’s Law “seems to be the key to price for both ETH and BTC.”
DISCLAIMER
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
IMAGE CREDIT
Featured image via Unsplash