A new report on Ethereum’s valuation and potential as a store-of-value asset has projected a significant increase in the token’s price over the next decade. According to the report, which uses cash flow projections and fully diluted valuation (FDV) calculations, Ethereum could reach a price of $11.8k by 2030.
The report’s authors estimate that ETH network revenues will rise from an annual rate of $2.6B to $51B in 2030, assuming Ethereum takes a 70% market share among smart contract protocols. This projection considers transaction fees, MEV (miner-extractable value), and “Security as a Service” as sources of revenue for the network.
To arrive at the $11.8k price target, the authors discount the projected value to $5.3k today at a 12% cost of capital derived from Ethereum’s recent beta. They also apply multiple estimates by using a long-term estimated cash flow yield of 7% minus the long-term crypto growth rate of 4%. The resulting FDV in 2030 is divided by the expected number of tokens in circulation, and then discounted back to April 20th, 2023.
The report provides more detailed assumptions and scenarios in its Ethereum Valuation Scenarios table, which includes different market capture rates and tax rates for different sectors. The authors also explore Ethereum’s potential as a store-of-value asset in comparison to other cryptocurrencies like Bitcoin and stablecoins.
While some experts have criticized valuation models for being too speculative or ignoring important factors like regulatory risks or technological innovations, others see them as useful tools for investors and analysts who want to make informed decisions based on available data.
As always, cryptocurrency prices are subject to volatility and uncertainty, so any prediction should be taken with a grain of salt.
