The “All-Weather” Portfolio is Toast
Ethereum Could Return 1,000% in a Year
It’s almost as if distributed ledger technologies (DLT’s, or blockchains) were invented just for 2020-2021.
Though DLT’s were introduced 12 years ago via the Bitcoin protocol, it is extremely timely that they have matured enough to cross into the financial lexicon today.
Interest rates are artificially suppressed, and we have an ever-increasing supply of dollars in our economic engine that wealth seeks protection from, which is a worldwide occurrence that extends well beyond just U.S. borders.
Assets with robust use cases that have limited, capped, or even declining supply (such as company buybacks) are in the driver’s seat for capital flows.
Useful assets that are in limited supply – in a universe of abundant paper currency – that are reasonably priced should therefore produce extraordinary returns over the coming year or two.
The most tantalizing assets in this environment are assets that either have a capped hard supply limit (such as Bitcoin capped at 21 million units) or even better, a declining supply.
FMT estimates the blockchain protocol Ethereum will fall into the latter camp once EIP 1595 and the proof-of-stake (PoS) merge transpires.
Ethereum will essentially have a dwindling supply of Ether on its chain, and if demand remains constant or better the price should explode higher.
According to FMT research, EIP 1595 should go into effect in July or August of 2021 on the Ethereum blockchain and PoW merging into PoS should occur by the beginning of next year. The knock on Ethereum since its protocol inception has been a theoretical unlimited amount of supply.
With the introduction of EIP 1595 along with the transformation to PoS, Ethereum will not only have a limited supply of tokens like Bitcoin, but FMT estimates Ethereum will have declining supply over the coming years.
If halving events have been stellar for Bitcoin, and they have been, the release of EIP 1595 on the Ethereum blockchain and the establishment of PoS should have a far more pronounced effect on Ether than a halving event has had on Bitcoin.
Because there won’t just be less supply, supply will be dwindling on the Ethereum blockchain! (See chart above).
In the New Economy, FMT believes Ethereum is growing up and finding a narrative all on its own (DeFi, gaming, NFT’s, etc.), which could rival Bitcoin is scope, use cases, and size in the coming years.
If you’d like to understand more or learn more about these blockchain protocols, please feel free to reach out.
Best regards,
Nicholas Green, CIO
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