Ethereum Consultant Explains How $ETH Price Could Reach $100K Within 5 Years

On Saturday (March 27), Ethereum engineering and strategy consultant Ryan Berckmans explained hw the price of Etheruem (ETH) could reach $100,000 within the next five years.

Berckmans, formerly a Senior Engineer at Augur, explained why $100k is a realistic price target:

Ethereum’s total fees need to be $1b per day for ETH to be worth $100k from fees alone (using a 3% discount rate). That’s 50x today’s fees, or 20x the best ever day’s fees of $50M on Feb 23. I think we’ll hit 50x total fees within five years.

He then went on to say:

ETH at $100k is an ~$11T market cap, which is 5.5x Apple. Yet, Apple’s revenue is already more than $1b per day. How can ethereum be worth 5.5x Apple if ethereum makes less revenue than Apple? It’s because ethereum’s profit margin is 99%+ due to proof of stake being almost free.

On March 1, Berckmans made the interesting observation that “Ethereum’s fees are worth ETH at $2850.” He then said that the reason for Ethereum price currently being below the value of the cash it generates is that “Ethereum’s fees go entirely to miners, who are on track to be paid 8% of all ETH this year.”

He then added that EIP-1559 and Proof-of-Stake (PoS) will “fix this”:

  • EIP-1559 redirects ~35% of miner revenue to ETH holders by burning a portion of fees. Note that this fee redirection is secure because Ethereum has temporarily overpaid for security. Last year, we paid miners $300M+ more than if EIP-1559 had been live.
  • Switching to proof of stake redirects ~100% of miner revenue to ETH holders. That’s because proof of stake validators are so cheap that they’re effectively free compared to proof of work miners. Yesterday, proof of stake would have saved ~$30M for ETH holders.
  • EIP-1559 likely launches in July with the ‘London’ hard fork. Next year, Ethereum switches to proof of stake. Ethereum may produce $20b+ in cash for ETH holders during our first year using proof of stake.”

Of course, as one Twitter user (@iamDCinvestor) correctly pointed out, it is possible that “L2s increase tx density by more than 50x and they pay 50x vs today on L1 for security.”

According to data by TradingView, around 00:10 UTC on Saturday (March 27), on crypto exchange Bitstamp, the Ethereum price reached $1,1719.30, which is currently its intraday high.

At the time of writing (i.e. as of 19:22 UTC on March 27), per data by CryptoCompare, $ETH is trading around $1,706.76, which means that in the past 24-hour period the Ethereum price has gone up 2.45%; in the year-to-date (YTD) period, ETH-USD is up 131.53%.

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The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.