Bram Berkowitz has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
It’s been a crypto-filled year since President Donald Trump’s administration took office. It has removed strict regulations and passed several pieces of landmark crypto legislation that could very well reshape the industry.
This has made longtime crypto bulls even more bullish that the sector will become mainstream and push crypto prices to new heights.
One of those bulls is Cathie Wood from ARK Invest, who has always believed in technology’s ability to disrupt, making crypto and blockchain a natural part of ARK’s portfolio. Here’s one top cryptocurrency to buy before it soars 3,536%, according to Wood.
One of the cryptocurrencies Wood and ARK are extremely bullish on is Ethereum (ETH 0.06%), the world’s second-largest cryptocurrency with a market cap of roughly $560 billion, as of this writing. Ethereum was officially launched in 2015 and has been the clear No. 2 cryptocurrency, second only to Bitcoin, the world’s largest.
Although Bitcoin is increasingly viewed as a store of value and a form of digital gold, the hype around Ethereum has to do with its blockchain network, which serves as the crypto capital for decentralized applications (dApps) with smart-contract functionality. Smart contracts are enforced by blockchain technology and essentially execute a contract if certain conditions are met. Many experts see lots of real-world functions for Ethereum, whether it’s in real estate, finance, healthcare, or elsewhere.
Ethereum is the most popular network for dApps, with thousands having been built on the network, and more than 234 million unique active wallets engaging with dApps on the network during the past decade.
Some of the most popular cryptocurrencies in the world were built as ERC-20 tokens on Ethereum’s network, and the majority of stablecoins are also currently issued on Ethereum.
Wood has long been bullish on Ethereum. At an ARK Invest conference last year, she said she sees the token reaching a $20 trillion market cap by 2032, based on a supply of 120 million coins. That number implies a price of $166,000 (with potential upside of 3,564%) compared to about $4,635 today.
However, the Ethereum Foundation has been removing tokens from circulation through a burning mechanism, meaning the price target could be higher, depending on how many tokens are burned.
Although not specifically linked to Wood’s price target, she and ARK have previously said they see similarities between Ethereum and U.S. Treasury bills. A few years ago, Ethereum transitioned its network from the energy-intensive proof-of-work (PoW) consensus mechanism to proof of stake (PoS). In PoS, Ethereum holders stake their tokens to get the opportunity to be selected to validate transactions and create new blocks.
The staked tokens earn a yield and are often used as collateral in crypto transactions. This is where Wood and her team see a connection between Ethereum and Treasury bills, and that would be huge if the concept gains momentum in the broader market.
Predicting crypto price targets is very difficult because digital currencies don’t generate traditional cash flow and earnings like publicly traded companies. The crypto sector is still relatively new and very volatile. Whenever I see big long-term predictions from notable figures like Michael Saylor, the head of the Bitcoin treasury Strategy, or Cathie Wood, I typically write them off as marketing.
That said, the long-term bulls on Ethereum have done well over the years, and it is one of the few cryptocurrencies I see having real-world functionality. Sure, its network frequently experiences congestion issues, and there are bigger questions about its scalability. But the network is already being used for digital transactions like stablecoins that are gaining real traction, which only increases demand for Ethereum.
Although I don’t know where Ethereum will trade in 2032, I do believe it can generate good long-term returns for investors.
