Wall Street banking giant Goldman Sachs Group Inc (NYSE:GS) has reportedly arrived at an $8,000 price target for Ethereum (CRYPTO: ETH) by the end of the year.
What Happened: According to a research note acquired by Zerohedge, Goldman Sachs’s managing director of global markets Bernhard Rzymelka detailed how Ethereum could surge as high as $8,000 in the next two months.
Referencing the Bloomberg Galaxy Crypto Index (red) on a log axis, versus the USD 2y forward 2y inflation swap (blue) in a chart, Rzymelka highlighted that crypto assets have traded in line with inflation breakevens since 2019.
“The local backdrop looks supportive for Ethereum as it has tracked inflation markets particularly closely, likely reflecting the pro-cyclical nature as a ‘network-based’ asset,” he wrote.
The Goldman strategist views Ethereum’s recent breakout rally to an all-time high ahead of $4,400 as “either a sign of exhaustion and peaking … or a starting point of an accelerating rally upon a break higher.”
If historical correlation with inflation forwards continues, then Rzymelka estimates that Ethereum could rally to a high of $8,000.
While acknowledging Ethereum’s rally could appear stretched to some, he noted “the RSI has yet to hit the overbought levels seen at past market highs.”
Overall, Rzymelka concluded that the rising levels of inflation could immensely benefit crypto assets.
“This lines up rather well with the Ethereum chart, suggesting a late-stage rally with longer-term market top ahead,” he said.
ETH Price Action: Ethereum was trading at $4,506.52, gaining 4.90% in the last 24 hours. The cryptocurrency had a daily trading volume of $19.2 billion and accounted for 16% of the crypto market at time of publication Tuesday.
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