- Investment manager VanEck’s report projects Ethereum’s price to reach $11,800 by 2030, potentially making it a competitor to U.S. Treasury bonds.
- The valuation is based on considerations such as transaction fees, miner-extractable value (MEV), and the concept of “security as a service”.
Global investment manager VanEck recently released an analysis report projecting that Ethereum (ETH) could attain a value of $11,800 by the year 2030. This projection could place Ethereum on the competitive stage against U.S. Treasury bonds. The valuation was calculated using a 12% discount rate on Ethereum’s present value, resulting in a base case valuation of $5,359.71.
This comprehensive study, penned by Matthew Sigel, Head of Digital Assets, and Patrick Bush, a Senior Investment Analyst for Digital Assets, explores various factors that could impact Ethereum’s future value. Key considerations include transaction fees, MEV, and the increasingly important notion of “security as a service.”
In addition to these factors, the report scrutinizes Ethereum’s market share in vital sectors and its potential as a store of value within the burgeoning cryptocurrency market. VanEck envisages that by 2030, the annual average revenue of the ETH network could surge from $2.6 billion to $51 billion, given Ethereum’s command of 70% of the smart contract protocol market.
Under the base case scenario drawn by the researchers, Ethereum could generate a revenue of $51 billion for the fiscal year ending April 30, 2030. After subtracting 1% for validator fees and 15% for global tax, Ethereum’s cash flows are estimated to reach $42.90 billion. Consequently, VanEck deduces a base-case price target of $11,848 per token by 2030.
Considering a 12% cost of capital, reflecting Ethereum’s recent beta, this target price is discounted to a current price of $5,300.
Furthermore, Ethereum’s EIP-4844 protocol upgrade, also known as “proto-danksharding,” is anticipated to greatly improve Ethereum’s scalability. Expected to be implemented during the Deneb-Cancun upgrade in late 2023, this development is projected to substantially reduce costs associated with Ethereum Layer 2 solutions, potentially by a factor of 10 or even 100.
While the EIP-4844 may momentarily decrease the quantity of ETH burned due to reduced Layer 2 solution fees, the expected growth in Ethereum’s economic activity could result in an overall increase in value accumulation in the medium term.
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