VanEck, a prominent asset manager, has updated its Ethereum price forecast based on changing market conditions.
Matthew Sigel, Head of Digital Assets Research at VanEck, confirmed that the firm’s $22,000 price target for Ethereum by 2030 remains, but shifting fundamentals suggest the need for a model update.
Originally set in June, the predictions included base, bull, and bear case price scenarios, which estimated Ethereum at $22,000, $154,000, and $360,00, respectively. The model was built on key assumptions on transaction revenue between Ethereum and L2s. However, recent data shows that changes in Layer 2 (L2) network activity may significantly alter Ethereum’s projected value.
First of all, the #ETH $22k price target is for 2030, whereas the Election Prediction was for 2024.
But I do agree that the changing fundamentals suggest a model update is in order.
We assumed a 50:50 split on TVL between Ethereum and L2s and 50:50 split on projected MEV (which… https://t.co/RB1ZRVzLaN pic.twitter.com/GiPoQT7IYA
— matthew sigel, recovering CFA (@matthew_sigel) October 17, 2024
Impact of Layer 2 Networks
Notably, VanEck’s initial prediction was grounded on a 50:50 split between Ethereum and Layer 2 solutions regarding Total Value Locked (TVL) and Miner Extractable Value (MEV). These metrics reflect Ethereum’s control over the value stored on its network and the earnings from participating in its operations.
However, the model’s forecast for Ethereum’s transaction revenue from L2 solutions initially pegged at a 90:10 split in Ethereum’s favor, has shifted dramatically. According to Sigel, recent data over the past four months indicates that the current revenue share is actually 10:90 in favor of Layer 2 networks. This divergence underscores the growing dominance of L2 solutions and their increasing role in taking value from Ethereum.
Given this change, Sigel noted that if this trend were to persist, Ethereum’s price target would drop by approximately two-thirds. The revised price target for Ethereum would then be approximately $7,333 by 2030.
Market Valuation Metrics
In the comment section, Sigel emphasized the importance of valuation metrics in the model. He explained that VanEck expects the market to value Ethereum at 33 times its free cash flow.
Further, VanEck’s June prediction suggested that Ethereum retains its unique qualities as a “Digital Oil,” a “Programmable Money,” and an “Internet Reserve Currency.” According to VanEck’s framework, these attributes continue to make Ethereum an essential asset within the broader crypto ecosystem.
Prediction Ignited by BTC’s Stance
VanEck’s Ethereum projection follows its bullish stance on Bitcoin, particularly in light of the upcoming U.S. presidential elections. Matthew Sigel had reiterated a 2023 prediction that voters would reject the anti-growth agenda of the Green Lobby, propelling Donald Trump to victory with over 290 electoral votes.
He suggested that, following this outcome, Bitcoin would reach a new all-time high on November 9, noting that this scenario is looking increasingly likely as the election approaches.
Additionally, the firm previously set a 2030 target of $350,000 for Bitcoin, based on the assumption that Bitcoin will capture half of the global gold market.
Further, VanEck anticipates that by 2050, central banks may allocate 2.5% of their reserves to Bitcoin, while the crypto could play a role in 5-10% of global trade.
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