Leading Ethereum backers say ETH is ‘significantly mispriced’ and misunderstood by institutional investors

Leading Ethereum technologists and talking heads said the second-largest cryptocurrency is “significantly mispriced,” according to an institutional “Bull Case for ETH” report published on Thursday. If compared to other commodities — like oil — the thought leaders said ETH could maintain a long-term price of $740,000 per token.

“This is a new asset class. Digital assets are new. Blockchains are new,” Vivek Raman, co-founder of the newly created Ethereum think tank Etherealize, told The Block in an interview. “We have to take this framework of adapting old valuation metrics to completely new assets. Looking at the underlying blockchain assets as just tech stocks sells them short.”

Comparing ETH to “global reserve assets like oil, the bond market, and M2 money supply” provides a better model for understanding Ethereum’s “terminal endpoint, Raman, one of the paper’s 21 co-authors, said. “Adoption, when it happens, it’s going to be as big as the internet, maybe even bigger.”

It’s not uncommon for investors to share price predictions. Just today, Galaxy’s Michael Novogratz said 1 BTC could eventually be worth $1 million. There is a growing number of investors who view Bitcoin as “digital gold” and in this vein the co-authors argued that ETH is akin to “digital oil.”

The authors noted that Ethereum currently accounts for the majority of blockchain activity that has found any semblance of product-market fit, like stablecoins and real-world assets. Over 80% of tokenized assets have been issued on Ethereum, including by leading asset managers and infrastructure providers.

“ETH is more than just a token — it serves as collateral for the onchain economy, computational fuel, and yield-bearing financial infrastructure. It is actively stockpiled, staked, burned, and utilized,” they wrote. Ethereum secures some $767 billion worth of assets. 

Ethereum’s value proposition

Further, there are structural aspects of the token that make it appealing. Following the EIP-1559 hard fork in 2021, the blockchain implemented a mechanism that burns tokens — capping the network’s maximum theoretical gross issuance at 1.51% annually. Since September 2022, ETH supply inflation has hovered near 0.092, lower than both fiat money and BTC, Raman noted. 

“Once you realize that you have this capped growth on supply, you’re going to have a very secure, sustainable asset,” Raman said. “And as there’s more on-chain activity, it can go from 1.51% to much lower, even negative. ETH’s lag behind BTC is a temporary mispricing, not a structural weakness, thereby creating a rare asymmetric bet.”

ETH currently trades well under its all-time high around $4,891, set in 2021. The authors think the token has “short-term” potential to reach $8,000 and $80,000 as a monetary reserve and commodity asset.

There are also a growing number of investors and institutions that are “stockpiling” ETH, similar to Michael Saylor’s Strategy. The Strategic ETH Reserve, backed by Ethereum co-founder Joe Lubin, holds approximately $2 billion worth of the asset while collectively the largest blockchain-based apps and related DAOs hold tens of thousands worth of tokens. 

That said, not everyone is convinced that ETH will one day be treated as a reserve asset. Noted commentator and DBA co-founder Jon Charbonneau agreed ETH is currently “mispriced,” but in the opposite direction. Charbonneau has repeatedly argued ETH is too expensive and, while an Ethereum bull, does not recommend holding the asset. 

The authors also noted that while “Bitcoin’s narrative is institutionally accepted,” it could be harder for investors to understand the inherent value of Ethereum. 

In recent months, Ethereum’s leadership at the Ethereum Foundation and the wider community have sought to reframe the network as a more competitive blockchain. The EF recently promoted two new co-directors, who have attempted to communicate the organization’s changing priorities, and Raman co-created Etherealize with praised developer Danny Ryan as a vehicle to address institutional clients and governments. 

Raman recently appeared before Congress to discuss recent regulatory advancements in the U.S.

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