Standard Chartered lifts year-end ether forecast to $7,500

By Kanchana Chakravarty

(Reuters) -Standard Chartered raised its year-end target for ether to $7,500 from $4,000 on Wednesday, citing improvement in industry engagement and uptick in holdings of the cryptocurrency in recent months.

The brokerage's new year-end target represents a premium of near 60% from ether's more than 3-1/2 year high of $4,700 on Wednesday.

The world's second largest cryptocurrency has become the token of choice for those looking for more active returns. Unlike bitcoin, which solely relies on price appreciation, ether can be used in staking, a practice where holders lock up their tokens to support the ethereum network in exchange for rewards.

Ether has soared over 50% in the past four weeks, helped by the passage of the Genius Act, a law to create a regulatory regime for dollar-pegged cryptocurrencies known as stablecoins. Prices of other crypto assets also rose, on hopes the law would lead to increased acceptance.

"We project that the stablecoin sector will grow by around 8x by end-2028, which would have a significant direct impact on fees on the Ethereum network," said Geoff Kendrick, Standard Chartered's head of digital assets research.

Most stablecoins are issued and transacted on the underlying Ethereum blockchain, driving up demand for ether to pay for transaction fees.

Ethereum's long-term growth depends on using its main blockchain (Layer 1) for high-value transactions, especially those tied to traditional finance, Kendrick said, adding that a big boost in Layer 1's capacity would help make this possible.

The brokerage raised its 2028 year-end ether forecast to $25,000 from $7,500.

Kendrick also sees potential for Ethereum treasury companies to increase their holdings of the token to 10% of all ether in circulation.

(Reporting by Kanchana Chakravarty and Medha Singh in Bengaluru; Editing by Harikrishnan Nair and Leroy Leo)