VanEck believes that the Ethereum network rivals Google and Apple in applications and financial platforms and has the potential to encroach on their market share.

According to a VanEck report, the price of Ethereum (ETH) will reach $22,000 in six years, thanks to ETF approval, network scaling improvements, and healthy on-chain progress.

In a report on Wednesday, the asset manager, which manages $89.5 billion in assets, noted that the Ethereum network’s growing market share in TradFi and dominance of the smart contract platform have created a path for token holders to Credible path to $66 billion in free cash flow.

Ethereum investment cases with large technology companies

VanEck described the case for investing in Ethereum as a "high-growth, Internet-native business system" that has the potential to disrupt the existing financial system and large technology companies such as Apple and Google. The company valued Ethereum by assessing the size of the market in business areas that blockchain applications would disrupt.

Across industry verticals such as finance, marketing, infrastructure, and artificial intelligence, Ethereum’s total addressable market is believed to be worth a combined $15 trillion. As an investment asset, ETH is considered "revolutionary" due to its versatility and can be classified as "digital oil," "programmable currency," "yield-generating commodity," or "internet reserve currency."

As VanEck speculates, as the Ethereum network grows, ETH will accumulate more value, especially as more ETH supply is burned with each transaction, which will benefit long-term holders.

VanEck believes: “The most attractive aspect of using Ethereum is the cost savings it can bring to businesses and users.”

While Apple and Google charge up to 30% of revenue from apps on their platforms, the Ethereum network charges just 24% through its decentralized finance (DeFi) apps. And, as network activity gradually shifts to second-tier scaling solutions, this expense ratio is expected to further reduce to the 5% to 10% range.

Ethereum and Bitcoin share in investment portfolio

VanEck considered two cryptocurrencies, Bitcoin and Ethereum, for inclusion when looking at a traditional 60/40 portfolio. They found that setting a portfolio's allocation to cryptocurrencies to a maximum of 6% significantly improved the Sharpe ratio of the entire portfolio and had a relatively small impact on portfolio drawdowns. Specifically, they recommend holding 3% of the portfolio each in Bitcoin and Ethereum.

When constructing a single portfolio focused on cryptocurrencies, VanEck recommends that for the best risk-reward ratio, 71.4% of funds should be allocated to Bitcoin and the remaining 28.6% to Ethereum. This means that there is a greater weighting in the portfolio to Bitcoin, as it is believed to provide higher risk-adjusted returns in this particular portfolio. This allocation is designed to maximize the overall performance of the portfolio while controlling risk.

According to VanEck’s research, cryptocurrencies as an asset class have the potential to play a positive role in investment portfolios and improve overall investment returns. This improvement can be achieved through proper allocation and risk management, that is, by controlling the proportion of cryptocurrencies in the portfolio and measuring their impact on the overall performance of the portfolio to achieve the purpose of optimizing the portfolio.

K33 Research predicted in a report published on Monday that an Ethereum ETF due to launch next month will attract significant inflows. The report also states that these Ethereum ETFs are expected to absorb up to 28% of funds from Bitcoin spot ETFs, which means that within five months of the launch of Ethereum ETFs, their total funding size is expected to reach $4 billion.

Conclusion:

VanEck’s report paints an optimistic picture of the Ethereum network’s potential for significant growth over the next decade. Through technological innovation, network expansion and the dominance of smart contract platforms, Ethereum is not only expected to subvert the traditional financial system, but also has the potential to occupy important market shares in multiple industry sectors. In addition, with the launch of Ethereum ETF, it is expected to attract more investor attention and capital inflows, further promoting the growth of Ethereum's market value.

At the same time, VanEck provides recommendations for the allocation of Ethereum and Bitcoin in traditional and cryptocurrency investment portfolios, providing an investment strategy that balances risk and return. These strategies not only help investors optimize asset allocation, but may also improve the overall performance of the portfolio through the inclusion of cryptocurrencies.

As the Ethereum network continues to develop and the cryptocurrency market continues to mature, we have reason to believe that Ethereum and its token ETH will play an increasingly important role in the future financial world. Investors considering adding cryptocurrencies to their portfolios should pay close attention to market dynamics and technological innovations to capture the growth potential of this emerging asset class.

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