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- Ether could hit $8,000 by end-2026, Standard Chartered analyst Geoff Kendrick wrote.
- Improving Ethereum architecture will lower costs, while gaming and tokenization could boost demand.
- Bitcoin's halving, regulatory developments, and the end to the bond market sell-off will also benefit ether.
Improving efficiency and boosted demand will lead to a seismic rise in the world's second largest cryptocurrency, Standard Chartered said in a Wednesday note.
By the end of 2026, ether could reach $8,000, or a 400% jump from today's price of around $1,600.
"We think the path higher for ETH prices may take longer than for BTC, but we see ETH eventually reaching a higher price multiple than BTC relative to current levels (5.0x versus 3.5x)," Head of FX Research, West, and Digital Assets Research Geoff Kendrick wrote.
But that's only a "stepping stone" to a larger long-term valuation of $26,000-$35,000, though this estimate assumes use cases and revenue streams that have not yet come about, the note said.
The forecast partially stems from expected improvements to the Ethereum blockchain.
The block is looking to enhance its performance through layer two scaling solutions and upcoming architecture improvements. For instance, plans to implement "danksharding" would allow Ethereum to manage 100,000 transactions per second.
A version of this, called "proto-danksharding," is set to be introduced in early 2024, and would significantly lower transaction costs on the blockchain.
"This should help to cement ETH's dominance in the smart contract space, thereby increasing its P/E ratio (if not its earnings) over the next couple of years," Kendrick said.
Meanwhile, demand for ether will climb as it finds new use cases, while trends that rely on the cryptocurrency are set to expand.
For instance, NFT transactions are the leading Ethereum use case, which Kendrick predicts will expand. Though he acknowledges that NFT market activity has faded, digital art prices generally follow broader crypto price flows — with the "crypto winter" coming to an end, NFTs should recover as well.
The development of blockchain gaming will also fuel NFT demand, in turn boosting ether. NFTs create scarcity in these types of games, representing virtual assets such as items or real estate.
Real-world asset tokenization, where ownership rights are represented in blockchain tokens, would also be a boon for ether that is set to grow.
"The obvious initial benefit of tokenisation is that it allows fractional ownership of otherwise lumpy or illiquid investments (e.g., real estate) at low cost; the costs associated with tokenisation are very low compared to other fractional ownership models, like IPOs," Kendrick wrote.
Tokenization also allows for around the clock trading, immediate settlement, ownership transparency, better investor access and cheaper costs.
Meanwhile, inflows into bitcoin — which Kendrick has previously projected to hit $120,000 by end-2024 — would likely spill over into ether, while the upcoming bitcoin halving next year would put upside pressure on crypto in general.
Meanwhile, positive regulator developments, such as the approval of crypto spot ETFs, would also benefit ether.
Both bitcoin and ether will see a considerable boost from the end of the bond market sell-off, which has seen Treasury yields surge to 16 year highs.