Written by: Michael Nadeau
Compiled by: Luffy, Foresight News
Tom Lee recently proposed at the Korea Blockchain Week that Ethereum's mid-term target price is $60,000, and stated that Ethereum is in a super cycle lasting 10-15 years.
If his judgment is correct, this super cycle will advance in waves, spanning multiple cycles, accompanied by the alternation of bull and bear markets.
Currently, we are in a bull market, but bull markets do not last forever.
Looking back at history, Ethereum fell by 94% in 2018 and by 80% in 2022, so we have reason to predict that a significant correction will occur again in the future.
Currently, we cannot determine when a pullback will occur, but by tracking multiple key indicators, we can reference the levels Ethereum has reached in past cycles to provide a basis for future trends.
Key Indicator Analysis and Price Targets
200-week moving average
Data source: The DeFi Report
Currently, Ethereum's trading price is 92% higher than its 200-week moving average ($2400).
In the 2021 cycle, when the market peaked, Ethereum's price was 492% higher than the 200-week moving average.
Scenario Analysis:
200% above the 200-week moving average: Ethereum price is $7300
250% above the 200-week moving average: Ethereum price is $8500
300% above the 200-week moving average: Ethereum price is $9800
350% above the 200-week moving average: Ethereum price is $11,000
400% above the 200-week moving average: Ethereum price is $12,200
Note: The 200-week moving average is a dynamic indicator, but over time, we are gradually replacing the price data for Ethereum in the $3000-$4000 range from about 4 years ago. Therefore, it is expected that the fluctuations of the 200-week moving average will be very small by the end of this year.
Ethereum price to realized price ratio
Data source: The DeFi Report, Glassnode
The realized price can serve as an alternative indicator for cost benchmarks. Since January 1, 2017, the average ratio of Ethereum price to realized price has been 1.6. The current ratio is 1.9.
In the 2017 cycle, the peak value of this ratio was 5; in the 2021 cycle, the peak value in April was 3.5, and in November, it was 2.9.
Scenario Analysis (assuming the ratio reaches 2.9):
If the realized price is $3000: Ethereum price is $8700
If the realized price is $3500: Ethereum price is $10,200
If the realized price is $4000: Ethereum price is $11,600
MVRV Z value
Data source: The DeFi Report, Glassnode
The Z value is used to measure how much higher or lower the market value is compared to the on-chain cost benchmark in terms of 'volatility units.' A higher Z value indicates that the market is overheated; a negative Z value indicates that the market is undervalued.
Since January 1, 2017, Ethereum's average Z value is 0.99, indicating an overall optimistic market sentiment.
The current Z value is 1.66, which is higher than the historical average but has not yet reached an overheated state.
In the 2021 cycle, in April, the peak Z value was 6.5, and in November, the peak Z value was 3.48.
Scenario Analysis:
If the Z value is 2.21: Ethereum price is $7000
If the Z value is 2.77: Ethereum price is $8000
If the Z value is 3.33: Ethereum price is $9000
If the Z value is 3.9: Ethereum price is $10,000
Note: Assuming that by the end of this year, the realized price increases by 22% (to $3000). For reference, the realized price has increased by 24% since April of this year.
Ethereum to Bitcoin market value ratio
Data source: The DeFi Report
Currently, Ethereum's market value is approximately 23.4% of Bitcoin's market value.
In November 2021, Ethereum's market value reached 55.5% of Bitcoin's market value.
If the Bitcoin price reaches $150,000 (up 23% from the current price), its market value will reach $3 trillion.
Scenario Analysis:
If Ethereum's market value is 35% of Bitcoin's market value: Ethereum's total market value is $1.05 trillion, corresponding to a unit price of $8658
If Ethereum's market value is 45% of Bitcoin's market value: Ethereum's total market value is $1.35 trillion, corresponding to a unit price of $11132
If Ethereum's market value is 55% of Bitcoin's market value: Ethereum's total market value is $1.64 trillion, corresponding to a unit price of $13559
The core question is whether Bitcoin will see a significant increase. Compared to the previous cycle, will Ethereum's increase relative to Bitcoin be moderate or explosive?
Ethereum to Nasdaq index ratio
Data source: The DeFi Report
In May and November 2021, the peak ratios of Ethereum to the Nasdaq index were 0.31 and 0.30, respectively.
Currently, the ratio is 0.20, and the current point of the Nasdaq index is 22788 points.
If the Nasdaq index rises by 5% by the end of this year (an annual increase of 23%), its point will reach 23927.
Ethereum Price Scenario Analysis:
If the ratio is 0.25: Ethereum price is $5981
If the ratio is 0.30: Ethereum price is $7178
If the ratio is 0.35: Ethereum price is $8374
If the ratio is 0.40: Ethereum price is $9570
Our baseline assumption is that the ratio of Ethereum to the Nasdaq index will continue to rise throughout the cycle, and this ratio will reach a new high (exceeding 0.30) during this cycle.
Summary
Our basic assumptions are as follows:
Ethereum price is 250% higher than the 200-week moving average, corresponding to a price of $8500;
If the realized price reaches $3000, and the price to realized price ratio is 2.9, the corresponding Ethereum price is $8700;
If Ethereum's market value reaches 35% of Bitcoin's market value, and if Bitcoin's price is $150,000, the corresponding Ethereum price is $8600;
Ethereum to Nasdaq index ratio reaches a new high, if the ratio is 0.35, the corresponding Ethereum price is $8300.
If the bull market continues, Ethereum's price may exceed $10,000; if the market turns bearish, the peak increase of Bitcoin will be limited, and Ethereum will also come under pressure.
Meanwhile, as market sentiment heats up, discussions about 'extended cycles' are becoming more prevalent, reminding me of the 'super cycle' narrative that was popular in 2021.
As we mentioned earlier, the baseline assumption remains: Ethereum will reach its peak for this cycle within this quarter.
