VanEck is a major asset management company that has dramatically cut their long-term forecast price for Ethereum (ETH). The previous estimate was $22,000.
The revision represents a decline of 67%, which has led investors and analysts alike to reconsider the future of Ethereum in light of increased competition and changing market conditions.
The #ETH price target of $22k is set for 2030, whereas Election Predictions was for 2024. However, I agree with you that the new fundamentals require a model upgrade. The split was 50/50 on TVL (between Ethereum and L2s) and on the projected MEV.
Matthew Siegel announced the shift, stating that earlier VanEck predictions had been overly optimistic.
VanEck initially predicted Ethereum could be worth $22,000 in normal market conditions. It would also reach $154,000 during a bullish market and $360,000 under incredibly favorable circumstances.
This reevaluation was necessary due to the rapidly changing cryptocurrency landscape.
Ethereum growth is threatened by layer 2 networks
VanEck’s new price prediction is primarily due to the growing prominence of Layer 2 networks (L2), which are built on top of Ethereum’s basic layer. These L2 networks have both attracted value and users from Ethereum.
VanEck had previously expected an equal distribution of Miner Extraction Value (MEV), Total Value Locked, and TVL between Ethereum and the L2 network.
According to recent data, L2 networks currently command 90% of the market, while Ethereum only accounts for 10%.
The significant change in the market shows that L2 products like Arbitrum or Optimism effectively address scalability issues and transaction costs, which makes them more attractive to users and developers.
Siegel warned that the trend of decreasing demand for Ethereum’s base layer could limit Ethereum’s potential price.
Ethereum doesn’t benefit from SEC approval of ETFs
Ethereum’s performance on the market hasn’t met expectations despite US Securities and Exchange Commission approving Ethereum spot exchange traded funds (ETFs).
VanEck’s revised forecast is a reflection of this performance compared with other major cryptocurrencies such as Bitcoin and Solana.
Initial, approval of spot ETFs seemed to be a catalyst for Ethereum’s growth. It would give institutional investors an easier way to access the asset.
VanEck has re-evaluated its forecast due to the tepid market reaction.
Bitcoin outlook amid Ethereum downgrade
VanEck, while reducing its Ethereum prediction, maintains a positive outlook on Bitcoin. Siegel says that Bitcoin’s trajectory could be significantly affected by the outcome of the U.S. Presidential elections.
The author believes that Donald Trump’s victory would lead to a sudden increase in Bitcoin value. It could even push it up to all-time records.
VanEck set a price target for Bitcoin of $350,00 by 2030. This reflects their confidence that Bitcoin can capture a greater share of global gold markets.
The firm has downgraded its outlook on Ethereum. This makes Bitcoin look like a stronger store of value, especially in today’s economic environment.
Ethereum’s dominance is being eroded by competing blockchains such as Solana, Avalanche and Avalanche. These offer lower transaction fees and faster speeds.
The rise of L2 network is also undermining Ethereum’s dominance over the non-fungible (NFT), and decentralized (DeFi), markets.
VanEck’s new forecast suggests that Ethereum’s position on the market may not be quite as stable as once thought.
Ethereum’s price could be affected by changes in regulation, particularly regarding DeFi protocols, and its ecosystem.
The SEC has approved spot ETFs, which is a good thing. However, the market’s lackluster reaction highlights the challenges Ethereum continues to face in maintaining investor interest.
VanEck’s new Ethereum price target indicates a cautious attitude towards the digital assets market.
Ethereum is still a key player in blockchain technology, but the changing dynamics of the market and the competition with L2 Solutions suggest future growth could be less than anticipated.
VanEck’s bullish view on Bitcoin offers an alternative narrative for investors. It suggests that people seeking to make long-term investments should consider diversifying into Bitcoin. This is especially true given the fact that it has the potential to grow despite geopolitical changes and as a growing digital store of wealth.
The post VanEck reduces Ethereum price forecast from $7,334 to $7.334: Why such a sharp change? This post may change as new information unfolds
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