very positive forecast on the price of Ethereum

Yesterday VanEck published a very positive prediction on the price of Ethereum.

In fact, they declared that they have raised their 2030 target to $22,000, thanks in particular to the news on the spot ETH ETF, progress in terms of scaling and on-chain data.

VanEck: Ethereum price prediction

THE current price of ETH it is around $3,800, and in fact it has been fluctuating around this level for about three months.

In the last three months, i.e. after the rise in February which took it from 2,300 to 4,000 dollars, it was above the current level only at the beginning of March, while from mid-March to mid-May it dropped to 2,800 dollars.

The year, however, started right around $2,300, so for now 2024 can be considered a substantially positive year.

Despite this, the all-time high of 2021 is still far away, because it was recorded near $4,900, so right now the target for the current cycle seems to be $5,000, in the medium term.

However, we must not forget that before the last big bullrun, i.e. in October 2020, its price was only 400 dollars, so the current price is already practically ten times higher. Furthermore, the previous cycle peak, recorded in January 2018, was below $1,500, which is less than half of current levels.

All this has allowed some analysts to project the price of ETH as high as $10,000 during the current cycle, and this makes VanEck’s prediction less bold than it might appear at first glance.

VanEck’s predictions on the price of Ethereum

The long analysis on the price of Ethereum shared by VanEck aims not only to hypothesize how the price of ETH could evolve in the next six years, but also and above all to identify the optimal allocation of the investment portfolio in this cryptocurrency.

The analysis was conducted by Matthew Sigel, head of digital asset research, Patrick Bush, senior digital asset investment analyst, and Denis Zinoviev, associate product manager.

The starting point is precisely the Spot ETF on ETHwhich is expected to be nearing completion in early July.

This would allow financial advisors and institutional investors to hold ETH with the safety of qualified custodians, and benefit from the advantages inherent to ETFs in terms of price and liquidity without having to worry about the custody of the tokens.

The second fundamental point is the consideration that Ethereum The network will likely continue its rapid growth, particularly regarding its market share compared to traditional financial market participants and Big Tech.

It is even hypothesized that it could attract 66 billion dollars, which consequently should bring its market capitalization to 2,200 billion dollars by 2030, compared to the current 460, and therefore to an ETH price of $22,000.

It is worth noting that at this moment Bitcoin capitalizes around 1,400 billion, and the totality cryptocurrency market does not exceed 2,800.

This is therefore a very optimistic forecast, but it does not refer to the current cycle.

Cryptocurrency market cycles

Cryptocurrency markets follow a cycle of approximately 4 years dictated by the cycle Bitcoin halving.

Ethereum was born in 2015, during the second cycle of Bitcoin and just over a year before the second BTC halving.

The one that occurred in April this year is only the third BTC halving experienced by Ethereum, with the first experienced just over a year after launch.

So the first full four-year cycle for Ethereum was the one that started in 2016 and ended in 2020, and it was within that cycle that it recorded an all-time high of $1,500 in January 2018.

The almost $4,900 reached in 2021 therefore represents the historic high of only the second complete cycle of the crypto markets experienced by Ethereum.

Furthermore, between the historical high of the first complete cycle and that of the second, the price of ETH marked a x3.2, and this seems to theoretically justify a rise even above $10,000 in this third complete cycle.

At this point the prediction of $22,000 as the maximum price for the fourth complete cycle of the crypto markets experienced by Ethereum does not seem so far-fetched, while still remaining decidedly very optimistic.

Portfolio allocation

Given all these considerations, VanEck’s extensive analysis suggests that adding a modest cryptocurrency allocation (up to 6%) to a traditional 60/40 portfolio could substantially improve the portfolio’s Sharpe ratio, with a relatively lower impact on drawdown.

Within this cryptocurrency allocation up to a maximum of 6% of the portfolio 60/40, they state that

The allocation that provided the best risk-adjusted returns is 70% BTC and 30% ETH.

It should be noted that the assumption of allocating up to 6% to cryptocurrencies is explicitly stated as a probably good assumption, while the 70/30 split refers only to past performance. This seems to suggest that cryptocurrency markets may change their overall trend in the coming years.

VanEck analysts also add that investors should still consider their personal risk appetite before making such decisions, because cryptocurrencies remain a high-risk investment.

However, I do not deny that it is precisely the data that suggests that a balanced inclusion of BTC and ETH within investment portfolios can offer enormous advantages in terms of improving returns compared to the incremental risk introduced.

However, it is necessary to highlight that VanEck has both BTC and ETH in its portfolio, as explicitly stated at the beginning of the analysis, and that it promotes some of its crypto derivative investment products such as ETFs.

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