Ether should be worth 75% lower – JPMorgan analysts

• Based on mining activities and the number of unique active addresses on the Ethereum network, the Ether price should be trading around $1000, said the analysts.

• They also estimated that growing institutional interest and upcoming network changes have caused investors to get ahead of themselves.

JPMorgan analysts have claimed that the recent market boom has forced Ether to price above its fair value. The analysts claim to have arrived at this conclusion by looking at the computing power and activities on the network to determine the actual value of the asset.

Nikolaos Panigirtzoglou, managing director of global market strategy at JPMorgan remarked:

Essentially, a larger network of users and miners makes the underlying blockchain more secure and implies greater acceptability of the cryptocurrency on that blockchain.

Based on the mining activity and the number of unique active addresses on the Ethereum network, the price of Ether should be trading around $1000 or 75 percent lower as claimed by the analysts. 

Prices appear to have diverged somewhat from the measures of network activity since the start of the year.

The Ether price has surged by 121% in the last three months to record a current price of a little over $4000. This has been linked to the boom in DeFi – platforms that ensure that crypto-denominated lending is facilitated outside traditional banking. 

JPMorgan analysts estimated that key factors such as growing institutional interest and upcoming network changes have caused investors to get ahead of themselves. The European Investment Bank issuing bonds worth $122 million on the Ethereum blockchain network also showed that it’s getting accepted in the corporate world. In addition, a major network change that will see some of the Ether coins burned to reduce supply is causing investors to enter the market in anticipation of the future price increase. 

Developers are also working on the gas fee challenge through a major upgrade known as EIP-1559. Ethereum’s infamous high gas fee model is on the verge of being replaced by an automatically determined one. The change of the fee may depend on the network congestion. 

The JPMorgan analysts also commented on the market size of altcoins such as Dogecoin, Ethereum Classic, Litecoin, Binance Coin, and others that have increased significantly in the past couple of weeks. They noted that the Bitcoin dominance has fallen in the last few months.

The share of bitcoin in the total crypto market has fallen steeply over the past month from around 55% to below 35%.