VanEck, a leading asset management firm, has drastically cut its long-term price forecast for Ethereum (ETH) to $7,333 by 2030, a significant drop from the previous estimate of $22,000.
This revision signals a 67% decline and has prompted investors and analysts to reevaluate Ethereum’s future amid intensifying competition and evolving market conditions.
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…
Matthew Siegel, head of digital asset research at VanEck, announced this shift in perspective, emphasizing that the firm’s earlier predictions were overly optimistic.
Initially, VanEck anticipated Ethereum prices could reach $22,000 under standard market conditions, $154,000 in a bull market, and even $360,000 in an exceptionally favorable scenario.
However, the changing landscape of the cryptocurrency market necessitated this reevaluation.
Layer 2 networks challenge Ethereum’s growth
A primary reason for VanEck’s revised price forecast is the increasing prominence of Layer 2 (L2) networks, which operate on top of Ethereum’s base layer and have attracted both value and users away from Ethereum itself.
Previously, VanEck expected a balanced distribution of Total Value Locked (TVL) and Miner Extractable Value (MEV) between Ethereum and L2 networks.
Recent data, however, indicates that L2 networks now command approximately 90% of the market share, leaving Ethereum with just 10%.
This significant shift highlights that L2 solutions like Arbitrum and Optimism are effectively addressing scalability and transaction cost issues, making them more appealing to developers and users.
Consequently, the diminished demand for Ethereum’s base layer services has prompted VanEck to adjust its price target, with Siegel warning that this trend could further limit Ethereum’s price potential.
SEC ETF approval doesn’t help Ethereum
Despite the US Securities and Exchange Commission (SEC) approving spot Ethereum exchange-traded funds (ETFs) earlier this year, Ethereum’s market performance has not met expectations.
VanEck’s revised forecast reflects this underperformance compared to other leading cryptocurrencies like Bitcoin and Solana.
Initially, the approval of spot ETFs was seen as a potential catalyst for Ethereum’s growth, providing institutional investors easier access to the asset.
However, the market response has been tepid, leading VanEck to reassess its outlook.
Bitcoin’s outlook amid Ethereum’s downgrade
While VanEck has cut its Ethereum forecast, the firm maintains an optimistic outlook for Bitcoin. Siegel suggests that the results of the upcoming U.S. presidential elections could significantly impact Bitcoin’s price trajectory.
He posits that a Donald Trump victory could spark a rapid increase in Bitcoin’s value, potentially pushing it to new all-time highs.
VanEck has set an ambitious price target of $350,000 for Bitcoin by 2030, reflecting confidence in Bitcoin’s capacity to capture a larger share of the global gold market.
This prediction stands in stark contrast to the firm’s downgraded outlook for Ethereum, reinforcing the view of Bitcoin as a more robust store of value in the current economic landscape.
Competing blockchains like Solana and Avalanche, which offer faster transaction speeds and lower fees, are eroding Ethereum’s market dominance.
Additionally, the rise of L2 networks is further undermining Ethereum’s control over decentralized finance (DeFi) and non-fungible token (NFT) markets.
VanEck’s revised forecast indicates that Ethereum’s market position may not be as secure as it once seemed.
Changes in regulations, especially regarding DeFi protocols and staking services, could impact Ethereum’s ecosystem and influence its price trajectory.
Although the SEC’s approval of spot ETFs represents a positive development, the lackluster market reaction underscores the ongoing challenges Ethereum faces in sustaining investor interest.
For investors, VanEck’s revised Ethereum price target signals a more cautious approach to the digital asset market.
While Ethereum remains a critical player in the blockchain space, the shifting dynamics of market share and competition from L2 solutions suggest that future growth may be more subdued than previously anticipated.
Conversely, VanEck’s bullish perspective on Bitcoin presents an alternative investment narrative, suggesting that those seeking long-term gains might consider diversifying their portfolios towards Bitcoin, especially given its potential to thrive amid geopolitical events and its growing status as a digital store of value.
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