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.
Join Cryptos Headlines Community
Follow Cryptos Headlines on Google News
