In a recent report, 21Shares calculated the potential value of the price of Ethereum (ETH) for the next 20 years, using the discounted cash flow model.
According to this analysis, the value of a single ETH could double by 2043 from its current level. Let’s see all the details below.
Ethereum price forecast for the next 20 years according to 21Shares
As anticipated, Ethereum is establishing itself as a powerful agent of decentralization of applications and services, similar to how TCP/IP protocols revolutionized the infrastructure of the Internet and the web.
Thanks to open standards and Internet protocols, Ethereum allows developers to create applications and interact with smart contracts without the need for centralized permissions.
This has led to the creation of a diversified ecosystem that ranges from finance to gaming and social media. Ethereum is therefore considered a revolutionary asset with the potential to transform our daily lives.
However, investors are wondering how to value it and what its future value might be. Unlike Bitcoin, Ethereum is based on an algorithm Proof-of-Stake (PoS).
In the latter, validators commit a part of their capital in ETH as a “stake” to receive recurring income from on-chain activities.
This positions Ethereum within the financial asset framework, allowing the use of staking yield and transaction fees as proxies for calculating future cash flows.
Growth forecasts
To estimate the value of Ethereum, 21Shares used the discounted cash flow (DCF) method, calculating the net present value of annual flows to validators.
Between May 5, 2023 and May 5, 2024, transaction fees and staking rewards generated total cash flows of 2.41 billion dollars.
According to 21Shares’ three-stage growth model, cash flows will grow between 60% and 80% through 2028, then between 25% and 40% through 2037, and finally between 10% and 15% until 2043.
In 2043, cash flows could reach approximately $496 billion. Applying a discount factor between 9.70% and 20.88%, 21Shares estimates that the value of Ethereum could reach a maximum of 837.6 billion dollars.
With a supply of 120,099,365.73 ETH, the maximum unit price would be $6,974.08, representing a 122% growth from current values.
However, 21Shares suggests investors interpret the results with caution and make their own judgments regarding projected cash flows and discount rates.
SEC concludes investigation into Ethereum 2.0
The United States Securities and Exchange Commission (SEC) recently closed its investigation into Ethereum 2.0. Therefore declaring that will not prosecute further lawsuits regarding past sales of ETH as securities transactions.
This development marks a significant moment for the Ethereum community and could have implications for the cryptocurrency industry as a whole.
Ethereum-focused software company Consensys Inc. announced this news via a statement titled “Ethereum Survives the SEC.”
According to Consensys, the decision followed a letter sent to the SEC’s enforcement unit on June 7.
The latter questioned whether the approval of more spot ETFs on Ethereum, based on the fact that “ETH is a commodity”, marked the end of the investigation into Ethereum 2.0.
In response, the SEC confirmed that it had concluded its investigation and would not take any enforcement action. Consensys described this decision as a victory for Ethereum developers and industry operators.
However, the company highlighted that the challenge of achieving regulatory clarity for staking and swapping services remains MetaMask, hoping that a lawsuit is not necessary to clarify that these services do not violate securities laws.
The SEC’s decision has sparked mixed reactions within the cryptocurrency community. XRP enthusiasts, in particular, reacted with some frustration.
The pro-XRP advocate Bill Morgan described the decision as Ethereum’s second “free pass” from the SEC in nearly six years, referring to ETH’s favorable treatment over other cryptocurrencies, such as XRP.
