VanEck believes that the Ethereum network is comparable to Google and Apple in terms of applications and financial platforms, and has the potential to eat into their market share.

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

In its report on Wednesday, the asset manager with $89.5 billion in assets under management noted that the Ethereum network’s growth in TradFi market share and dominance among smart contract platforms creates a credible path to $66 billion in free cash flow for token holders.

The case for Ethereum investment with big tech companies

VanEck describes 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 values ​​Ethereum by assessing the market size of the business areas that blockchain applications will disrupt.

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

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

“The most attractive aspect of using Ethereum is the cost savings it can provide to businesses and users,” VanEck said.

While Apple and Google charge up to 30% of app revenue on their platforms, the Ethereum network only charges 24% through its decentralized finance (DeFi) applications. And as network activity gradually shifts to second-layer scaling solutions, this fee ratio is expected to be further reduced to the 5% to 10% range. $ETH

Ethereum and Bitcoin in investment portfolio

VanEck considered two cryptocurrencies, Bitcoin and Ethereum, for inclusion when looking at a traditional 60/40 portfolio. They found that setting the maximum allocation to cryptocurrencies in a portfolio to 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 dominated by cryptocurrencies, VanEck recommends that in order to achieve the best risk-return ratio, 71.4% of funds should be allocated to Bitcoin and the remaining 28.6% to Ethereum. This means that Bitcoin has a larger weight in the portfolio because it is believed to provide a higher risk-adjusted return 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 reasonable 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 its report released on Monday that the Ethereum ETF, which is expected to be launched next month, will attract a large amount of capital inflows. The report also pointed out that these Ethereum ETFs are expected to absorb up to 28% of the funds from the Bitcoin spot ETF, which means that within five months after the launch of the Ethereum ETF, its total capital scale is expected to reach $4 billion. #VanEck #ETH

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's recommendations for the allocation of Ethereum and Bitcoin in traditional and cryptocurrency portfolios provide 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 addition 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. When considering including cryptocurrencies in their portfolios, investors should pay close attention to market dynamics and technological innovations to grasp the growth potential of this emerging asset class.