Ethereum

This Is Why Ethereum Is Undervalued By 4X! ETH Price Poised To Hit More Than $10k, Know When? 

Written by: Elena R

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Elena R

Elena is an expert in technical analysis and risk management in cryptocurrency market. She has 10+year experience in writing - accordingly she is avid journalists with a passion towards researching new insights coming into crypto erena.

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Feb 4, 2022

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Highlights

    The king altcoin continues to hold the support against $2,500 support.

    Ethereum's price is utterly undervalued by at least 4x and is poised to hit $10k.

Since reaching milestone ATH of the $4.8k mark, the star altcoin has been on a steep downfall over the past 10 weeks. The descent experienced a sort of tug war between the buyers and sellers at the $4.1k and $3.7k mark that provided massive liquidity. As the bearish dynamism persisted, the king lost half of its value plummeting below $3k

However, the discounted cash-flow model suggests that Ethereum’s price would be $10k by now, but it is undervalued by 4x. In general, when someone says “ETH is going to hit $10k”, usually it is driven by weak logic by hard-core ETH fans. High hopes and dreams regarding increased return on investment. In reality, the discounted cash-flow model suggests that the king alt would be at $10k today. 

Three Reasons Why Ethereum Is Undervalued By 4X!

1. The star altcoin has a real revenue. 

ETH processes a small fee for each transaction on its blockchain. In January only, fees added up to $1.3 billion worth in fees. The fees get split into two parts, one is the base fee and another tip fee. In total fees, 70% of the revenue will be burnt, which results in increased demand thereby uplifting the price action. 

As per the reports of ETH watch the burn, $36 million worth of ETH was burnt in just 24 hours. Due to the high burning mechanism, fans gave it the term ultrasound money. Meanwhile, the other 30% is paid as dividends to holders once ETH 2.0 launches this year. 

2. Ethereum discounted cash-flow valuation models: 

The model collectively puts ETH at a $10k price valuation. However, the model assumes a 25% annual growth rate and a 35x price earning ratio. Which conservatively puts the current price at $10k. 

3. Models are as good as their assumptions: 

Currently, the majority of the transactions happen on ETH, and fees are huge. Hence, if the majority of the transactions move to L2s and if L1 chains continue to dominate, then ETH will be having a major setback. Buy veterans across the crypto-verse argue that protocols are largely driven by speculations, not by huge investments or fundamentals. Therefore, being very familiar with crypto in the space, it would have reached $10k by now. 

Collectively, the need of the hour is market sentiments and if the retailers re-enter the market in the meantime, ETH price is likely to skyrocket to $10k in the next supercycle. In the meantime,  the aforementioned reasons would catalyze the price action. 

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Elena R

Elena is an expert in technical analysis and risk management in cryptocurrency market. She has 10+year experience in writing - accordingly she is avid journalists with a passion towards researching new insights coming into crypto erena.

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