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Goldman Sachs Says If Historical Correlation With Inflation Persists Ethereum Could Rise To $8000 By Year-End

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Ethereum price could rise to $8,000 by the end of the year if historical correlation with inflationary expectations persists.



This point of view was shared by the managing director of investment bank Goldman Sachs Bernard Rzimelka, with Zerohedge.

He referred to the correlation observed since 2019 between the market estimate of inflation over a two-year horizon and the Bloomberg Galaxy Crypto Index. The weight of Ethereum in the latter is 40%, which is the same as that of Bitcoin. The remaining 20% comes from Litecoin, Bitcoin Cash, and EOS.

eth inflation 1

According to the graph, the expected inflation rate reached 2.86% by October 25, while the cryptocurrency basket index did not have time to react to the latest jump.

 

Goldman strategist writes, the local backdrop looks supportive for Ethereum as it has tracked inflation markets particularly closely, likely reflecting the pro-cyclical nature as a “network-based” asset.”

“the latest spike in inflation breakevens suggests upside risk if the leading relationship of recent episodes was to hold (grey circles below).”

eth and inflation 2

On October 29, Ethereum renewed its all-time high above $4400 in the form of a narrowing wedge.

For Goldman, it is “either a sign of exhaustion and peaking… or a starting point of an accelerating rally upon a break higher.” 

Goldman hints that Ethereum could surge as high as $8000 in the next two months if the historical correlation with inflation persists.

The latter scenario reinforces the fact that the RSI indicator has not yet reached the overbought levels seen at past market highs, he added.

“The RSI has yet to hit the overbought levels seen at past market highs.”

eth inflation 3

 

Goldman concludes,

This lines up rather well with the Ethereum chart, suggesting a late-stage rally with longer-term market top ahead.”

Recall that billionaire Mark Cuban said that Ethereum has the largest investment potential among the leading digital assets.

The founder of the second-largest crypto, Vitalik Buterin, admitted the superiority of his project over bitcoin.

 

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Mark Brennanhttps://thecryptobasic.com/
Mark is 27, holds a Master degree in Business Administration, and works as a content Creator at TheCryptoBasic mostly on Crypto Market Updates. Since 2014 he has been active in the crypto sector. Thanks to the Business College in which other than Business subjects, he was taught about the disruptive potential of Blockchain. His interests include Blockchain technology and Crypto Market innovations. He also founded a small startup in which he gives lectures on cryptocurrencies.

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