VanEck says that Ethereum is becoming a strong competitor to Google and Apple as both an application and finance platform, and it will start to take over their market share. According to VanEck, Ethereum (ETH) will reach $22,000 within six years due to ETF approvals, better scaling, and solid on-chain progress.
In a Wednesday report, the $89.5 billion asset manager highlighted that Ethereum’s growth in the traditional finance market and its dominance among smart contract platforms pave the way for $66 billion in free cash flow for token holders.
VanEck on Ethereum’s Disruptive Potential and Investment Appeal
VanEck describes Ethereum as a “high-growth, internet-native commercial system” that poses a significant threat to existing financial systems and tech giants like Apple and Google.
The asset manager estimates Ethereum (ETH) could reach $22,000 within six years, driven by factors such as ETF approvals, scaling improvements, and robust on-chain progress. VanEck emphasizes Ethereum’s role as a platform for diverse applications, starting its valuation by assessing potential disruptions across sectors like finance, marketing, infrastructure, and artificial intelligence, estimating a collective market worth of $15 trillion.
VanEck views ETH as a revolutionary investment asset, likening it to “digital oil,” “programmable money,” a “yield-bearing commodity,” or an “internet reserve currency.” They highlight the long-term value accrual through Ethereum’s growing network, particularly noting the reduction in ETH supply through transaction burns, which benefits long-term holders.
Moreover, VanEck argues that Ethereum offers significant cost savings compared to traditional tech giants. While Apple and Google typically charge 30% of users’ hosted application revenue, Ethereum’s decentralized finance (DeFi) apps charge only 24%, a figure expected to decrease further to between 5% and 10% with the migration of activity to layer 2 networks.
VanEck’s Insights on Portfolio Allocation and Ethereum ETF Predictions
VanEck conducted a study on the optimal weighting for Bitcoin and Ethereum within traditional investment portfolios. They found that allocating a maximum of 6% to cryptocurrencies significantly enhances the portfolio’s Sharpe ratio with minimal impact on drawdowns, splitting this allocation evenly at 3% each for Bitcoin and Ethereum.
For crypto-only portfolios, VanEck recommends a distribution of 71.4% Bitcoin and 28.6% Ethereum to achieve the best risk-reward balance.
According to VanEck, these findings underscore cryptocurrencies’ potential to enhance portfolio performance in a controlled and measurable manner.
Looking ahead, Ethereum ETFs are anticipated to launch next month. K33 Research predicts in a Monday report that these funds could capture 28% of the flows seen by Bitcoin spot ETFs, amounting to $4 billion within five months post-launch.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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