• Goldman Sachs predicts an Ethereum price peak of $8,000, claiming that ETH is an inflation hedge

  • Ethereum has had an impressive start to the new month, rising by more than 31.6 percent in the previous 30 days.

    Goldman Sachs Group Inc (NYSE: GS), an American multinational investment bank and financial services company, has identified Ethereum (ETH), the world’s second-largest digital currency, as a viable inflation hedge. According to Bernhard Rzymelka, Goldman Sachs’ Global Markets managing director, crypto assets have traded in line with inflation breakevens since 2019, fueling the market’s price rise.

    Despite the fact that the correlation figures may have little to no impact on the rising price, the bank confirms that the positive sentiment on the likelihood of cryptocurrencies returning enormous gains during periods of inflation, such as the one we are currently experiencing, has favored the persistent rise in the valuation of digital currencies.

    The current growth of the cryptocurrency industry to a $2.65 trillion market cap is fueled in large part by the economic policies of governments all over the world. The emergence of the coronavirus pandemic exposed this loophole to a large extent, as central banks embarked on a money printing spree that quickly washed the economies with excess fiat notes, ushering in an unavoidable inflationary upsurge.

    Among its crypto peers, Goldman Sachs believes Ethereum is a good hedge.

    After arguing that cryptocurrencies are a worthy asset to turn to in the face of rising inflation, the Goldman Sachs strategist identified Ethereum as one of the digital currencies with the best use case to benefit from investors’ reliance on the nascent asset class as an inflationary hedge.

    The local backdrop appears supportive for Ethereum, according to the Goldman Sachs strategist, because “it has tracked inflation markets particularly closely, likely reflecting the pro-cyclical nature as a ‘network based’ asset,” adding that “the latest spike in inflation breakevens suggests upside risk if the leading relationship of recent episodes is to hold (grey circles below).”

    Ethereum has had an impressive start to the new month, rising by more than 31.6 percent in the previous 30 days. The price of the cryptocurrency is currently $4,351.48, up 3.5 percent in the last 24 hours. Despite the recent surge, Goldman Sachs strategists predict a massive price peak of $8000 for the open-source smart contract protocol if the current correlation holds.

    Goldman Sachs believes that with the right conditions in place, this price peak can be reached in the next two months, a timeframe that Pro-Ethereum supporters believe is rather distant.

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