Prospects of Ether: A Fidelity Digital Assets Forecast

Prospects of Ether: A Fidelity Digital Assets Forecast

Fidelity Digital Assets' Future Outlook on Ether

On July 18, Fidelity Digital Assets published a prospective "Q2 2023 Signals Report." The report was optimistic about Ether's (ETH) prospects for the coming year and its long-term future. Although the price of Ether has appreciated by 62% this year, the bullish forecast does not necessarily mean that the recent bull-run will continue.

Comparing Fidelity's Forecast with Market Statistics

Institutions like Fidelity Digital Assets may have a rosy long-term view for ETH's price. However, it is necessary to juxtapose such optimistic outlooks with real-time network and market data to ascertain their accuracy.

Why Fidelity is Bullish on Ether

Fidelity’s bullish stance on Ether is driven by several factors, including the network's high burn rate as opposed to coin issuance, momentum in creating new addresses, and an increase in the number of network validators.

As per Fidelity's report, the net issuance since September 2022's Merge has led to a net reduction of more than 700,000 Ether in supply. Additionally, the firm cites Glassnode data, which shows a rising number of Ethereum addresses transacting for the first time, indicating robust network adoption.

The document also references a 15% surge in the number of active Ethereum validators during Q2.

EIP-1153's Potential Impact

Expectations are high for EIP-1153, which could invigorate the Ethereum network by enhancing smart contract efficiency, lowering costs, and amplifying the Ethereum Virtual Machine design. This change carries significant implications for decentralized exchanges (DEXs) that saw Ethereum’s dominance slip from 60% to 46% over the past half-year, as per DefiLlama data.

Upcoming Dencun Upgrade

The Ethereum network stands to benefit from a planned upgrade of the leading DEX, Uniswap. During a July 17 presentation at the Ethereum Community Conference, it was revealed that the forthcoming Uniswap v4 would enable users to devise unlimited types of pools using programmable buttons, native ETH support, and a singleton contract that executes internal transactions before settling final balances.

Professional Traders’ Outlook on Ether

Data published by Laevitas reveals a current Ether's three-month futures premium of 4%, lower than the 5.5% noted on July 14. This metric points to a diminished propensity among traders to use leverage for bullish Ether positions. Further, according to a recent survey by CryptoVantage, 46% of 1,000 North American cryptocurrency investors over the past five years see Ether as the most likely contender to overtake Bitcoin.

However, Fidelity's report's optimism towards Ether's price over the next 12 months does not necessarily translate to short-term gains. High gas fees and dwindling interest from leverage buyers might just tip the odds in favor of Ether prices dipping below the channel support.