Ethereum witnessed a lot of growth this year. It surpassed Bitcoin and produced more gains. But its market cap is still a long way from $2 trillion.
According to Mathew Sigel, Ethereum can reach a $2 trillion market cap in a “blue sky scenario.” The prediction isn’t a surprise with the level of confidence that Ethereum currently has. Some even speculated that it reached as high as $20,000 per coin.
What is a Blue Sky Scenario?
It is used in financial markets to represent a best-case scenario for every asset. The base case has the most potential scenario for an asset. It is used to represent the outcome for an asset.
The other is the worst-case scenario. Here, everything fails about the asset and nothing will work out. All assumptions and predictions didn’t come to materialization. And the asset seems to fail.
Last is the blue sky scenario. It is when everything goes according to plan. The asset does pretty well and it could possibly do in the market. Forecasts are right for the success of that asset.
For Matthew Sigel, he believes that the blue sky scenario for Ethereum is that the $2 trillion market cap is possible for the cryptocurrency.
A base case scenario will be seeing the market cap of ETH hitting $1 trillion in just a few years. However, a $2 trillion market cap in a blue sky scenario doesn’t seem to be out of place for a digital asset with unlimited utilities.
Ethereum quickly catches up in popularity with Bitcoin. Though Bitcoin still commands a higher market valuation than what Ethereum does by over 50%.
Ethereum disrupts Technology
Sigel has been on the lookout for technologies that have the power to “disintermediate not only big tech but other kinds of centralized institutions.” Sigel stated this when referring to his conclusions to buy Google on his investment research note “Google is evil.”
He continued that blockchain technology is such that anyone could join the network from anywhere for as long as they have internet connection.
He noted that the valuation of Ethereum is very cheap when compared to other Web 2.0 software companies. The price of sales valuation was even lower. However, he continued saying that the volatility of the asset and the earnings model is what could help drive the price higher.
Sigel believes that if Ethereum captures two-thirds of the value and the Ethereum market cap and revenue ratio holds steady, then Ethereum can land an enterprise value between $1.8 trillion and $2.3 trillion.
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