Ethereum to undergo three halvings? Resident physician goes viral! Extensive research predicts Ethereum to reach $150,000

Reduced liquidity and halving will lead to a decrease in Ethereum supply, while market and corporate demand will increase.

(This article is authorized to be reprinted from Chain News, the original title is "Why is this resident physician willing to bet that the Ethereum price will eventually exceed $150,000?", original article here)

Twitter account @SquishChaos has recently gained fame for boldly predicting that the price of Ethereum token ETH is expected to exceed $150,000 in this bull market.

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In fact, @SquishChaos's real identity is a resident physician named Nikhil Shamapant, a graduate of the Icahn School of Medicine at Mount Sinai in New York City. Of course, he is also a blockchain investor.

To support his views, he wrote a 79-page report, analyzing in detail why he believes that under normal market conditions, the ETH price will reach $30,000-50,000 in 2023, and has the potential to exceed $150,000 in a bull market. This lengthy report is rich in information and overall, elaborates on why Ethereum could reach $150,000 from four aspects:

• Staking and DeFi reduce Ethereum's liquidity.
• Market and corporate demand for Ethereum continue to increase.
• Ethereum will undergo three similar "halvings" in the next 12 months.
• Ethereum is gradually being accepted by the public.

Let Chain News take you through the logic behind this bold prediction.

Decreased Liquidity

Staking and DeFi have reduced the liquidity of Ethereum. Currently, staking and DeFi have locked up a total of 12% of Ethereum. With the incentive of increasing profits, more Ethereum holders are staking or providing liquidity to mine for rewards. Nikhil Shamapant mentioned, "This ratio could potentially reach 30% in the future."

Within the locked Ethereum, the majority of funds are concentrated in decentralized exchanges (DEX) and decentralized lending projects.

In Ethereum's decentralized exchanges, Uniswap, SushiSwap, 1inch, Balancer, Curve, and other leading exchanges attract the majority of funds.

Among the lending projects on Ethereum, Compound, Maker, and Aave occupy the majority of the market share.

Ethereum holders engage in liquidity mining on decentralized exchanges and lending platforms, earning substantial profits while providing liquidity. Annual returns typically exceed 25%, with higher returns attracting more individuals to stake their Ethereum, leading to decreased liquidity and reducing selling pressure, thereby providing strong support for Ethereum's price increase.

Increasing Demand for Ethereum

The renowned U.S. stock trading platform Robinhood has begun supporting trading for 16 cryptocurrencies including ETH. Companies like Tesla, Paypal, and Venmo have announced their foray into purchasing cryptocurrencies. Some futures and asset management companies have introduced Bitcoin futures or derivatives products, and will soon extend their services to Ethereum. VISA has also started supporting trading of the USD-pegged stablecoin USDC on the Ethereum mainnet.

Additionally, the U.S. and Canada will welcome Ethereum index funds ETFs. On April 20, three Ethereum exchange-traded funds (ETFs) approved by the Ontario Securities Commission (OSC) in Canada officially launched, bringing over $1 billion in capital flow to Ethereum. Purpose Investment, a Canadian asset management company managing over $10 billion in assets, announced that their Purpose Ethereum ETF will directly invest in physically settled Ethereum, allowing investors to participate in the Ethereum market. The company's website states that this will be the world's first physically settled Ethereum ETF, eliminating the need for digital wallets, with the company using investors' ETF purchase funds to buy real Ethereum and store it in offline cold wallets.

Cryptocurrency ETFs primarily provide a compliant investment channel for institutional investors, enabling traditional financial market institutions to participate.

Nikhil Shamapant believes that as more companies start supporting and purchasing cryptocurrencies including Ethereum, there is a significant increase in market demand for Ethereum, which in the long run bodes well for the price surge of ETH.

"Triple Halving" as a Stimulus for ETH Price Surge

Several upcoming improvement mechanisms for Ethereum will have effects similar to Bitcoin's triple "halving."

EIP1559 Plan: The Ethereum London hard fork scheduled for June 14, 2021, will implement the EIP1559 plan, introducing a deflationary mechanism to Ethereum by modifying the structure of gas fees.

The congestion issues on the Ethereum network have long been a concern. As early as 2017, the popularity of CryptoKitties caused significant congestion on the Ethereum network, leading to skyrocketing gas fees. Last year, the rise of liquidity mining and the DeFi craze increased financial demands like trading and lending on Ethereum, causing gas fees to surge to new highs. High gas fees and network congestion have increased transaction costs and hindered the development of projects in the Ethereum ecosystem. Some Ethereum users have quietly shifted to other chains with lower fees.

The EIP1559 plan will split Ethereum gas fees into Basefee and Miner Tips.

The Basefee pricing mechanism will shift from an "auction-style" to a "market rate" pricing mechanism, dynamically adjusting based on the network's current usage rate and being directly burned. The fundamental logic is that when Ethereum network usage exceeds 50%, the Basefee will increase; when network usage is below 50%, the Basefee will decrease, fluctuating within a small range.

Additionally, Miner Tips will remain as income for miners who package transaction data. While the direct burning of Basefee has caused some dissatisfaction among miners due to compromising their interests, in the long run, burning Basefee introduces a deflationary mechanism to Ethereum, effectively reducing miners' selling pressure.

Ethereum 2.0: Ethereum 2.0 is expected to launch between October and November 2021, adopting a Proof of Stake (POS) mining mechanism. Ethereum 2.0 has two main goals: to enhance overall performance and provide a stronger infrastructure for application development, and to optimize the token economic model, where newly issued Ethereum will rely on staked ETH, making ETH an essential economic resource in the ecosystem.

The PoS mechanism utilizes a staking mechanism for proof of stake validation, meaning running nodes must stake their held Ethereum. The more Ethereum staked, the greater the potential for node earnings. Nodes may purchase more Ethereum from the market for staking, and as Ethereum is staked, the circulating supply of Ethereum in the market decreases. Therefore, the POS mechanism will reduce the circulation of Ethereum in the market, effectively achieving a "halving" effect.

According to Nikhil Shamapant's estimation, the current daily Ethereum supply dump is approximately 22,300 coins. After the EIP1559 upgrade and before the implementation of Ethereum 2.0, the supply dump will decrease to 15,700 coins per day. After the EIP1559 and Ethereum 2.0 upgrades, the supply dump will drop to 2,600 coins per day. Going from 22,300 to 2,600, this represents a 90% reduction, calculated through the triple halving formula: 50% 50% 50% = 12.5%.

Gradually Embraced by the Masses

Ethereum's intrinsic value, explosive growth in user addresses, significant transaction volume, lower fees, attractive DeFi and staking mining rewards, the variety of coins supported by Ethereum, the extensive application of NFTs, and more intuitive use cases than gold indicate Ethereum still has significant room for growth until it garners the same attention as Bitcoin. As DeFi, NFTs, EIP1559, Ethereum 2.0, and other events gain traction, more people will become familiar with Ethereum. Currently, Ethereum's search volume on Google is less than Bitcoin's, but one day Ethereum will rise to prominence alongside Bitcoin.

In summary, due to the decreased liquidity caused by DeFi and staking mining, the increased demand for Ethereum from markets and large companies, the driving forces of EIP1559 and Ethereum 2.0, and the gradual acceptance of Ethereum by the general public, Nikhil Shamapant believes that by 2023, Ethereum could reach a minimum price of $30,000 to $50,000, and breaking $150,000 is entirely feasible if the market remains strong.