Ethereum (ETH), the world’s most-used blockchain and second-largest by market cap, set fresh all-time highs yesterday amidst a stronger fundamental narrative. The asset is now up over 1,520% in the past year, and 50% in the past two weeks alone.
But while come would say ETH rise from under $100 in mid-2020 to over $3,400 yesterday could signal the end of its run, Spencer Noon, an investor at early-stage crypto fund Variant Fund suggests the move could just be beginning.
Ethereum to $10,000?
In a tweet thread last week, Noon pointed out ten metrics that showed Ethereum was undervalued at its $397 billion market cap and could run further. “Ethereum dwarfs every blockchain in terms of fees paid, with a current run rate of nearly $7 billion, confirming massive demand for $ETH block space,” he tweeted.
‘Block space’ refers to the limited space in each block processed on the Ethereum blockchain for including transactions and other smart contract information. Higher fees suggest greater demand for including transactions.
#1: Ethereum dwarfs every blockchain in terms of fees paid, with a current run rate of nearly $7 billion — confirming massive demand for $ETH block space. pic.twitter.com/WFJITBdJd7
— Spencer Noon (@spencernoon) April 30, 2021
Addresses and DeFi values have spiked as well, considering the above. “Ethereum has 625k daily active addresses (90-day MA), a figure that continues to climb and now sits comfortably at ATHs,” said Noon.
Data from tracking tool DeFi Pulse shows such decentralized protocols lock over $76 billion at press time, a sevenfold increase compared to mid-2020. Even “DEXs,” short for decentralized exchanges, are performing on par with their centralized counterparts, he said.
“Monthly #DEX volume stands at more than $60B, up ~60x YoY — proving #DeFi liquidity already rivals #CeFi.”
#6: Monthly #DEX volume stands at more than $60B, up ~60x YoY — proving #DeFi liquidity already rivals #CeFi. pic.twitter.com/t4byFLoJa4
— Spencer Noon (@spencernoon) April 30, 2021
Settlements
Next, Noon pointed out that Ethereum currently settles over $30.5 billion daily (and trillions of dollars per year). Global payments processor PayPal, in comparison, settles only over $2.5 billion daily, he noted.
Ethereum has exceeded expectations in terms of stablecoins—cryptocurrencies pegged on a 1:1 with a fiat currency—usage and settlements as well. The blockchain reached over $50 billion in “outstanding” supply and boasts over 500,000 daily unique senders, Noon pointed out.
Even Bitcoin, the world’s largest cryptocurrency by market cap, has found representation in a big way on Ethereum. “More than 200k $BTC ($11.2B) are now represented on Ethereum in various forms—a sign that $ETH is becoming an economic vacuum for all assets, including Bitcoin,” Noon tweeted.
#7: More than 200k $BTC ($11.2B) are now represented on Etherem in various forms — a sign that $ETH is becoming an economic vacuum for all assets, including Bitcoin. pic.twitter.com/HEvekEKnw9
— Spencer Noon (@spencernoon) April 30, 2021
NFT growth and EIP-1559
The fund manager further noted ‘newer’ market categories, such as the booming non-fungible token (NFT) market, were undergoing their own adoption cycles. Indeed, the niche sector has grown from a mere afterthought in 2019 to a $30 billion behemoth in under a year.
Meanwhile, perhaps the biggest growth catalyst was reserved as the final point. Noon stated that the much-awaited EIP-1559—a proposal that burns Ethereum after each transaction among other features—would result in “in hundreds of millions worth of $ETH being burned each year”
“This is a massive catalyst for $ETH value capture and its overall fundamental investment case,” Noon ended.
#10: Finally, in less than 3 months(!), the EIP-1559 upgrade will be activated, likely resulting in hundreds of millions worth of $ETH being burned each year — this is a massive catalyst for $ETH value capture and its overall fundamental investment case. pic.twitter.com/Suvvqp4OMG
— Spencer Noon (@spencernoon) April 30, 2021
The fanboys are arguably amped up.
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