VanEck: Ethereum to hit $22K by 2030

The ETF issuer VanEck has released an Ethereum analysis report, raising its price prediction for ETH in 2030 to $22,000. Additionally, VanEck has analyzed the optimal investment ratio for adding Bitcoin and Ether to portfolios.

ETH Price Prediction: $22,000 by 2030

The asset management company VanEck, which has already issued a Bitcoin spot ETF, has also applied for an Ethereum spot ETF. VanEck expects the Ethereum spot ETF to be approved by the SEC for listing soon. This development will allow financial advisors and institutional investors to hold this unique asset under the custody of qualified custodians and benefit from the pricing and liquidity advantages of an ETF.

Driven by strong value propositions to entrepreneurs, the Ethereum network may continue to gain market share rapidly from traditional financial market participants and an increasing number of large tech companies. Meanwhile, if Ethereum can maintain its dominant position as a smart contract platform, we will see a reliable path where token holders will generate $66 billion in free cash flow by 2030, supporting $2.2 trillion in assets, and the ETH price will reach $22,000.

The $22,000 is the base case predicted by VanEck, with the bullish scenario reaching as high as $154,000, while the bearish scenario is only $360.

How Much Cryptocurrency Should Be Allocated in Assets?

Adding BTC and ETH to a Traditional 60/40 Portfolio

VanEck's research indicates that adding a moderate allocation of cryptocurrencies to a traditional 60/40 portfolio can significantly increase the portfolio's Sharpe ratio, with the following allocation:

• 3% Bitcoin
• 3% Ethereum
• 57% S&P 500 Index
• 37% US Bonds

This portfolio provides the highest risk-adjusted return per unit of risk. In other words, by maintaining a conservative overall allocation of 6%, the addition of cryptocurrencies can achieve the highest risk-adjusted return.

Note: In portfolio management, the Sharpe ratio, also known as the risk-adjusted return per unit of risk, is a measure of investment efficiency, indicating how much excess return an investor can expect for each unit of risk undertaken.

Pure Cryptocurrency Portfolio

For a pure cryptocurrency portfolio, a close to 70/30 allocation between Bitcoin and Ethereum offers the best risk-adjusted return.

The report highlights that balanced inclusion of BTC and ETH can significantly increase returns. The research emphasizes the potential for cryptocurrencies to enhance portfolio performance in a controlled and measurable manner. However, VanEck also reminds investors to consider their individual risk tolerance.