- Ether could surge 80% to $US8,000 ($AU10,769) in the next two months, Goldman Sachs has said.
- A strategist at the bank said ether closely tracks inflation expectations – which have recently jumped.
- Ethereum’s token could be reaching reaching a “starting point of an accelerating rally,” Goldman said.
Ether, the cryptocurrency of the ethereum network, could well jump 80% to $US8,000 ($AU10,769) in the next two months if it keeps tracking inflation expectations, Goldman Sachs has said.
Goldman’s global markets managing director Bernhard Rzymelka noted Monday that crypto assets have closely tracked inflation over the past couple of years.
Rzymelka compared the Bloomberg Galaxy Crypto index with a market-based measure of inflation expectations and found there was a strong correlation.
He said ether has tracked inflation markets particularly closely. The strategist added that the token is pro-cyclical – that is, it tends to go up when the economy does better.
Given that inflation expectations have recently risen sharply, ether could well be about to jump as well, Rzymelka said.
Ether rose to an all-time high of close to $US4,500 ($AU6,057) on Tuesday, according to Bitstamp data. Goldman said the recent chart pattern suggests that the cryptocurrency is either becoming exhausted or is reaching a “starting point of an accelerating rally.”
Rzymelka’s note included a chart looking at the potential future direction of ether, showing that it could surge to $US8,000 ($AU10,769) by the end of the year. That would be around 80% higher than Tuesday’s record high of $US4,468 ($AU6,014).
However, Goldman cautioned that central banks are unlikely to let inflation keep rising sharply. If ether continues to follow inflation expectations, then there is likely to be a rally followed by a “longer-term market top ahead.”
Many institutional investors are highly skeptical of this argument, however, and say that cryptocurrencies such as bitcoin and ether are far too volatile to include in financial portfolios.