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Goldman Sachs Predicts That Ethereum Will Reach $8,000 By The End Of 2021

Goldman Sachs, a multinational investment bank, believes Ethereum’s native token (ETH) might roughly treble its USD value in the final two months of 2021.

Bernhard Rzymelka, the financial institution’s Managing Director, supported the projection by citing the correlation between cryptocurrencies and worldwide inflation rates. More specifically, they are proportional, and rising inflation leads to all-time highs in digital assets.

In a recent note, the top executive highlighted why ETH might reach $8,000 by the end of the current year. Since 2019, cryptocurrencies, according to him, have traded in line with inflation breakevens. He claimed that increasing inflation is fueling a record spike in digital asset values, notably ether.

Rzymelka drew a graph using the Bloomberg Galaxy Crypto Index on the log axis versus the USD 2-year forward 2-year inflation swap. The graph follows “inflation markets especially closely,” he says, possibly reflecting the asset’s pro-cyclical nature as a “network-based” asset.

The second-largest cryptocurrency just reached an all-time high of $4,460. Despite being up more than 5x since the beginning of the year, Goldman Sachs’ note predicted even bigger gains in the next two months. According to the economist, ether might reach $8,000 if the association with inflation FWDs continues.

Rzymelka went on to say that the entire digital asset sector has developed in recent years and may now profit the most from rising inflation. This “almost perfectly aligns with the Ethereum chart, implying a late-stage rally with a longer-term market peak looming.”

It is worth noting that PayPal Co-Founder Peter Thiel feels that rising digital asset values suggest financial problems. Concerning bitcoin, the billionaire stated that BTC prices above $60,000 indicate that the world economy is in a state of crisis, and central banks are in a “total insolvency moment.”

The massive banking institution appears to be enthusiastic about Vitalik Buterin’s blockchain initiative and its native cryptocurrency. Back in July, financial analysts anticipated that ETH would eventually outperform BTC as a store of currency.

They also believe that the blockchain network powering ETH has the greatest real-world application potential, and that it is the most popular development platform for smart contract applications.