Ethereum: The Hidden Gem That Institutional Investors Dont Fully Grasp

Prominent technical experts and Ethereum advocates have claimed that the second-largest cryptocurrency by market capitalization is significantly undervalued. According to The Block, this statement is derived from a report aimed at institutional investors.

The analysts believe that when comparing Ethereum to commodities like oil, its fair long-term price could potentially reach $740,000.

Raman noted that comparing the cryptocurrency to «global reserve assets such as oil, the bond market, and the M2 money supply» provides a clearer picture of the «ultimate state toward which Ethereum is striving.»

Experts highlighted that Ethereum has absorbed a significant portion of on-chain activity, indicating signs of product-market fit. This includes primarily stablecoins and RWAs — initiatives led by top management firms and infrastructure providers.

The report also points out structural characteristics that make the cryptocurrency appealing. For example, the implementation of a burn mechanism through EIP-1559 during the London hard fork established a cap on the maximum annual rate of issuance growth at 1.51%, which is below the current rates of most fiat currencies.

Amidst the backdrop of Israeli airstrikes on Iran, the price of Ethereum dropped by 8.2% in a single day, according to CoinGecko. The asset is trading around $2,532, which is 48.3% lower than its all-time high of approximately $4,878 set in November 2021 near that mark.

Despite this decline, the report’s authors remain confident that Ethereum has a «short-term» potential to reach $8,000, and eventually $80,000, if it is utilized as a reserve asset and commodity.

There is a growing number of investors accumulating Ethereum in a similar manner to how Bitcoin is being amassed by Michael Saylor’s Strategy. For instance, the “strategic ETH reserve” supported by Joseph Lubin holds assets worth approximately $2 billion, while leading blockchain applications and their associated DAOs retain tens of thousands of tokens.

However, not everyone is convinced that Ethereum will become a reserve asset over time. Analyst and co-founder of DBA, John Charbonneau, while optimistic about the project, believes that Ethereum may be overvalued even now and advises against purchasing it.

The report’s authors themselves acknowledge that while the «narrative surrounding Bitcoin is institutionally accepted,» investors might find it more challenging to assess the intrinsic value of Ethereum.

It’s worth noting that as of June 11, Ethereum spot ETFs outperformed Bitcoin-based funds in terms of daily capital inflow.