Coinspeaker Coinbase Research Report Predicts Upside Surprise in Ethereum (ETH)
The world’s second-largest cryptocurrency Ethereum (ETH) has delivered a lackluster performance in comparison to Bitcoin and other altcoins in the market. However, the latest report from Coinbase shows that Ethereum’s long-term positioning remains strong and it could surprise investors on the upside very soon.
The second-largest cryptocurrency by market value has increased by 29% year-to-date, trailing behind its larger counterpart, Bitcoin (BTC), which has surged by 50%. But the Coinbase report mentions that “Ether may have the potential to surprise to the upside in the coming months”.
It also added that as of now, the altcoin doesn’t have any major sources of supply-side overhang such as pressure created by miner selling or token unlocks. Coinbase analyst David Han wrote:
“To the contrary, both staking and layer 2 growth have proven to be meaningful and growing sinks of ETH Liquidity. ETH’s position as the center of decentralized finance (DeFi) is also unlikely to be displaced in our view due to the widespread adoption of the Ethereum Virtual Machine (EVM) and its layer 2 innovations.”
The EVM (Ethereum Virtual Machine) is the core processing system of the Ethereum blockchain. It enables developers to create smart contracts and allows nodes to interact with them. Layer 2s are independent blockchains built on top of layer 1s (the base layer), designed to alleviate scaling and data bottlenecks.
Don’t Discard Spot Ethereum ETFs
Furthermore, Coinbase notes that the potential for spot Ethereum ETFs can’t be understated. The crypto exchange believes that the market is underestimating the odds and timings of a potential approval, thereby leaving sufficient space for upside surprises.
The first deadline for the approval of the spot Ethereum ETF stands next week on May 23. However, several market analysts have stated that the chances of such an approval seem to be very slim at this point. Some of the top market analysts also believe that the US spot Ethereum ETFs won’t come until the end of 2025.
“Even if the first deadline of May 23, 2024, encounters a rejection, we think there is a high likelihood that litigation could reverse that decision. In the interim, we believe the structural demand drivers for ETH as well as the technological innovations within its ecosystem will enable it to continue straddling across multiple narratives,” the Coinbase report reads.
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Coinbase Research Report Predicts Upside Surprise in Ethereum (ETH)