According To Bloomberg Intelligence, One $ETH Might Be Worth Over $6,000 Following Ethereum’s Next Upgrade.

According to a discount cash-flow valuation model, Ethereum ($ETH) might be worth more than $6,000, since the cryptocurrency’s impending significant upgrade is expected to turn it into a “equity-like instrument.”

According to a Bloomberg Intelligence report, Ethereum’s upcoming “Merge” upgrade, which will change the network’s consensus algorithm from Proof-of-Work to Proof-of-Stake, where network validators stake their assets to verify transactions, will allow for the use of traditional financial ratios, because blockchains have no direct costs and revenue represents profits.

Stakers on the network are entitled to a share of money – fees earned on the network – in exchange for helping to protect it, similar to how Bitcoin miners assist secure the BTC network. According to Bloomberg:

“If demand for blockspace and total fees paid increases, stakers will enjoy both higher payouts and reduced issuance, with the opposite also true.”

According to the study, Ethereum transaction costs increased to $9.8 billion last year, 16 times what they were in 2020. The spike occurred as the decentralized finance and non-fungible token (NFT) markets exploded, with Ethereum accounting for the majority of the volume.

It goes on to say that Ethereum is anticipated to deliver $12.7 billion this year, up 30% from last year. The analysis also forecasts a 30% yearly increase in cash flow over the following three years, with a terminal growth rate of 20% in 2035.

Bloomberg Intelligence calculated ETH values of $6,120, $5,539, and $9,328 using three different discounted cash flow models based on this data. ETH is presently trading at $3,300.

Notably, renowned cryptocurrency exchange Coinbase has predicted that following the network merging, Ethereum staking rewards might double.

In a statement to customers, Coinbase said that once the Ethereum mainnet combines with the Beacon Chain – which it expects to happen “around June of this year” – ETH staking yields might climb because “rewards will incorporate net transaction (ex-base) fees currently paid to miners.”

When the Ethereum mainnet and the Beacon Chain combine, it will “mark the end of proof-of-work for Ethereum, and the full transition to proof-of-stake.” The merger is “scheduled to occur prior to the deployment of shard chains.”

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Patrick

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