FILE PHOTO: Representation of Ethereum, with its native cryptocurrency ether, is seen in this illustration taken November 29, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
(Reuters) -Citigroup has set a year-end price target of $4,300 for ether, the world's second-largest cryptocurrency, citing investor demand and growing interest in ethereum-based use cases such as stablecoins and tokenization.
The Wall-Street brokerage's target is still below ether's record high of $4,955.14, which it hit last month.
Citi said ether's recent price strength may be driven more by sentiment than fundamentals.
"Current prices are above activity estimates, potentially driven by recent buying pressure and excitement over use-cases," Citi said in a note dated Monday.
Ether has increasingly become the preferred token for companies seeking more active returns. Unlike bitcoin, which relies solely on price appreciation, ether can be staked, allowing holders to earn yields by supporting the ethereum network.
Yet, Citi expects ETF flows into ether, a proxy for demand, to be smaller than bitcoin.
Last month, Standard Chartered raised its year-end target for ether to $7,500 from $4,000, citing stronger industry engagement and rising corporate holdings. StanChart said the stablecoin sector could grow eightfold by 2028, driving up ethereum network fees and demand.
Citi also outlined a bull case of $6,400, driven by rising activity and broader adoption of ethereum-based applications, and a bear case of $2,200 in the event of macroeconomic weakness and falling equity markets.
(Reporting by Rashika Singh in Bengaluru; Editing by Shilpi Majumdar and Shailesh Kuber)
