Will institutional push for tokenization propel ETH to $20,000?
What are the chances that Ethereum's Ether (ETH) hits $20,000?
This would bring the crypto asset powering the largest smart chain to a market capitalization of $2.41 trillion.
This would make it more valuable than Meta, the Facebook parent and based on today's valuations, ETH would be the 6th most valuable asset and more valuable than Bitcoin, assuming it doesn't grow beyond today's market value.
A number of crypto enthusiasts have imagined ETH at $20,000, specifically during the DeFi boom, which had several projects riding at insane valuations that today, most can't dream of ever seeing the same projects and all associated assets reclaim those values.
Decentralized finance (DeFi) in recent times have seemingly been sidelined and much attention is placed on Treasury companies and tokenization of real world assets.
Many speculate that the tokenization of both off-chain liquid assets like major stocks and FX and illiquid assets and markets will propel ETH to higher valuation.
Will institutional push for tokenization indeed propel ETH to $20,000?
Between 2022 and today, the tokenized real-world assets markets have grown by over 465% from being just $5 billion to over $28.26 billion today and the Ethereum blockchain has a 52.53% market share, according to data from RWA.xyz.
The second leading blockchain for RWAs as of today is ZKsync Era, which is an Ethereum L2, with 15.12% market share, bringing the largest smart chain’s ecosystem to a tokenized RWAs markets capture to over 67.53%!
Considering that this is merely a $28.26 billion market today, this may seem like nothing.
But when we shift our attention to the fact that tokenization advocates are aiming to bring a market such as real estate, worth over $400T on-chain and stocks, which over 10,000 publicly traded companies have a combined valuation of over $128.47 trillion, + several other markets including Forex with over $7 trillion in daily transaction volumes.
A continued 67.53% dominance of such a market is evidently significant!
The numbers are decent enough to push ETH to over $20,000 but the question remains if long-term, Ethereum will continue being the favored blockchain and how its fee problem may impact its adoption and effectively its native asset growth?
If Ethereum L2s can effectively drive decent revenue to the L1, we can expect ETH to perform well long-term.
But this assumes that institutions and companies tokenizing real-world assets and offering several associated services will opt for an EVM L2 rather than maybe launching on Solana? Or perhaps a new L1?
We already have cases of several L1 rollouts targeting stablecoin payments, which is essentially FX on-chain, something many don't really grasp.
As more stablecoin and payments-focused chains get launched by institutions and companies, FX volumes will move on-chain. Trading global currencies will happen on markets built on-chain with these several thousands of wrapped fiats.
Coming back to Ethereum and ETH, I would say that right now, Ethereum remains the #1 smart chain for building or connecting to the crypto ecosystem. It's the most widely bridged to and controls significant volumes across key markets and that makes it attractive for bringing traditional markets atop.
We can expect that TradFi will seek means to hold more control over value flow, but when we look at institutional interest in things like ETH staking, especially for traditional assets like ETFs for ETH, it's an easy conclusion that there's a long-term play where ETH performs really well as the finance and business world moves on-chain!
Thank you for reading!
Posted Using INLEO