• If Ethereum maintains its correlation to inflation expectations, analysts expect a rally of 80% within the next two months. 
  • The largest altcoin recently hit its highest monthly close in history.
  • Ethereum 2.0 Altair Beacon chain update was a success and the altcoin is now heading toward deflation with the “Merge.”

Goldman Sachs analysts have predicted that the Ethereum price would break out within the next two months. The altcoin closed October posting over 40% in gains, and its market capitalization is currently six times that of the second-largest altcoin, Binance Coin (BNB)

Investment bankers see possibility of ETH price hitting $8,000

In a note circulated by Goldman Sachs Global Markets managing director Bernhard Rzymelka, cryptocurrencies have traded along a line with inflation breakevens in between for nearly two years now. The director refers to the Bloomberg Galaxy Crypto Index, which compares inflation to the USD 2-year, 2-year forward inflation swap. 

An inflation swap is a derivatives contract between parties that transfer inflation risk by exchanging fixed cash flows, and here the 2-year,2-year is the average inflation rate over a two‑year period starting in two years.

Correlation is not considered causation, however, it is a clear indication that it acts as a driving force for crypto asset rallies and dips. Analysts argue that if the current market-based views of inflation pressures persist, it may be considered“either a sign of exhaustion and peaking… or a starting point of an accelerating rally upon a break higher.”

Analysts hint at the Ethereum price rally and set a target of $8,000 for ETH within the next two months if the historical correlation with inflation persists. 

USD Inflation Swap 2Y2Y Forward.

USD Inflation Swap 2Y2Y Forward

In the case of Ethereum, the inflation swap is key to price prediction, since Ethereum has tracked inflation markets closely, reflecting their pro-cyclical nature as a network-based asset. 

Ethereum closed in October at $4,287.56, its highest monthly close of all time. The successful implementation of the Altair Beacon chain upgrade has taken Ethereum another step closer to the “Merge” (transition from proof-of-work to proof-of-stake). 

Within the past twelve months, the altcoin hit its all-time high and all-time low price. Nearly $3 billion worth of ETH tokens have been burned since the implementation of EIP-1559. Consistently higher burn is expected to drive ETH deflation and Ethereum prices higher. 

FXStreet analysts have evaluated the ETH price trend and predicted that Ethereum will continue pushing higher toward $5,400.

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Elon Musk’s Tesla faces $440 million loss on its BTC holdings while whales continue to dump

Elon Musk’s Tesla faces $440 million loss on its BTC holdings while whales continue to dump

The electric car manufacturer faces a dire fate as its Bitcoin holdings further devalue amidst a market rout that is seeing whales readying to sell by rapidly pouring their Bitcoin onto crypto exchange platforms.

More Bitcoin News

Ripple does not stand a chance against SEC, affirms former securities regulator

Ripple does not stand a chance against SEC, affirms former securities regulator

Former Chief Robert Cohen believes the Securities & Exchange Commission's (SEC) ’s case against payment giant Ripple is key, however the outcome may not be as significant. The regulator is likely to file a motion for reconsideration on losing the case against Ripple. 

More Ripple News

Cardano’s Vasil hard fork launches on testnet positioning ADA price for a breakout

Cardano’s Vasil hard fork launches on testnet positioning ADA price for a breakout

Cardano price is at a point in its journey where things could go either way. As ADA consolidates above a stable support level, things could turn ugly if it breaks or bullish if it bounces. Therefore, investors need to be careful with their decision.

More Cardano News

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Cryptos at risk following KuCoin insolvency rumors

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Cryptos at risk following KuCoin insolvency rumors

Bitcoin price has been ranging since June 18, but rumors of insolvency have been spreading on multiple popular platforms in the industry. KuCoin, the fifth-largest cryptocurrency exchange in the world is at the center of bankruptcy rumors. 

More Cryptocurrencies News

Bitcoin: This support level can define BTC’s fate

Bitcoin: This support level can define BTC’s fate

Bitcoin price ended Q2 with a -56% return, which is the first in its 11-year history. On-chain metrics hint at bottom formation but technicals reveal more room to the downside. Bitcoin price has finished the first half of 2022 and things are not looking good. With record negative returns, BTC is likely to continue heading lower, especially if one particular support level is breached. 

Read full analysis

BTC

ETH

XRP