Former Goldman Sachs executive, Raoul Pal has revealed that he assumes that the price of Ethereum (ETH), the second-largest market capitalisation cryptocurrency, could amount to $20,000 “this cycle” based on Metcalfe’s rule.
Revealing parts of his next Global Macro Investor (GMI) study, Raoul Pal said on social media that it is “all Metcalfe’s law” and that “ETH = BTC” whether investors like it or not. He began referring to a model produced by his team to explain Metcalfe’s Law on the BTC network using active addresses and the price of the cryptocurrency, as well as market capitalisation.
Pal, who before founding the Global Macro Investor (GMI) macro economic and investment policy analysis service in 2005 managed the Man GLG fund and worked with Goldman Sachs, then pointed out that Ethereum looks like BTC in its early days, based on the increasing number of active addresses.
Metcalfe’s Theorem, it is worth recalling, states that the influence of a network is equal to the number of nodes in that network. Pal then added charts showing that the rise of Ethereum is very close to that of BTC and that Metcalfe’s Rule “seems to be the key to price for both ETH and BTC.”
He added, however, that the market capitalisation of ETH is increasing higher than that of Bitcoin at the same rate, based on the first one million active addresses.
Based on his estimates and the current price of Ethereum, Pal assumes that the cryptocurrency will see the “exact same” price as the BTC last cycle, which suggests that it could go to a new all-time high close to the $20,000 level.
CryptoCompare data reveals that ETH is now priced at $1,230 and is now close to its previous all-time peak of just over $1,400. Bitcoin, meanwhile, is getting closer to $40,000 at $38,300. In 2017, the flagship cryptocurrency reached its new all-time high, which was only surpassed this year.
Raoul Pal said last month that BTC’s latest bull run is “giantly different” from that seen in 2017, based on the acceleration of the stock after the halving and the structure of the market. In November 2020, he said he had 98% of his nett worth in crypto.
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