Etherealize, the institutional marketing and product arm for the Ethereum ecosystem, has set a new long-term price target for ETH at $250,000, arguing the token represents something of a unique asset in the history of money. 

The price call is significantly lower than Etherealize’s previous $740,000 per token target, set last year during the firm’s first public communique. It is also a significant reach for an asset that is currently trading at $2,300, according to The Block’s price page.

"It's all about timing and inevitability," Vivek Raman, co-founder of Etherealize, told The Block. "We think Ethereum is going to be the backbone of the global financial system, and that there's going to be one or two digital assets that become the store-of-value assets."

If bitcoin is a "foregone conclusion," then ETH is "the other contender," Raman added. Notably, Etherealize's report does not give a target date for its price prediction. 

Etherealize launched last year to communicate Ethereum’s usefulness as an institutional asset. 

Better money?

Core to Etherealize’s argument is that ETH is both a store-of-value like bitcoin and gold, as well as a productive asset that generates returns, due to the Ethereum blockchain paying for its network security through proof-of-stake consensus.

Today, the combined monetary premium of gold and Bitcoin is approximately $31 trillion. If Ethereum captured that same premium, the implied price of ETH would be north of $250,000, at the current circulating supply of 121 million ETH.

However, Ethereum also has "real economic activity underneath," in the form of a burgeoning DeFi and stablecoin economy, unlike "pure monetary assets" like gold and bitcoin. This not only provides downside protection even if the full monetary premium takes time to arrive, but may ultimately make ETH more attractive as an investment, the report argues. 

"ETH is the first monetary asset that compounds without counterparty risk," Etherealize wrote. "For all of human history, you had to choose: hold money (stable, unproductive) or invest it into productive assets (risky, wealth-generating). The two categories were mutually exclusive. Ethereum dissolves this distinction."

In particular, ETH flips the historical script with its negative carrying cost — in that it compounds while remaining a pure bearer asset, breaking the tradeoff between "safe money" and "productive investment."

Ethereum staking returns between 2% and 4% per year, which is not terribly high, but represents a relatively safe way to compound earnings, Etherealize’s Mike McGuiness told The Block. 

"Everybody's just looking at gold’s market cap and bitcoin, saying that that's a 20x," McGuiness, a self-avowed former Bitcoiner, said. "You should be looking at Ethereum the same way, because it's actually better money than bitcoin, because bitcoin doesn’t compound." 

Not only are gold and bitcoin "dead capital" because they don’t natively earn yield, but bitcoin is facing a potential existential crisis in the form of its security budget — the possibility that bitcoin transaction fees will not replace the block mining subsidy once all 21 million bitcoins are mined, reducing the incentive for bitcoin miners to contribute computing power to securing the network, McGuiness argued. 

Dominant settlement layer?

Ethereum is already the dominant settlement layer for tokenized assets, stablecoins, and DeFi, which represents structural, scalable demand for the asset.

Moreover, because a portion of Ethereum’s transaction fees are burned, the network caps its supply at 1.5% growth per year and can even become deflationary as usage grows.

That said, in the past year, several significant competitors have emerged that challenge Ethereum’s perch as the top institutional blockchain, like Canton, which is backed by dozens of Wall Street giants, Tempo, which is being built by Stripe, and Solana, which is already garnering real RWA deployments. 

"These alt L1s are really competing against Ethereum L2s," Raman said, arguing that Ethereum is in a category of its own as the first and most widely adopted smart contract chain. "They're execution layers, so they're not really competitive with ETH. They're not money, they're not as sovereign as ETH and they're not as decentralized or as permissionless."