So far in 2024, Bitcoin (BTC -2.31%) has attracted much of the attention of crypto investors, thanks primarily to all the buzz surrounding the launch of the new spot Bitcoin ETFs. But don't sleep on Ethereum (ETH -0.80%), which is finally showing signs of making a bull market breakout above the $2,000 price level.
For Ethereum to hit a future price of $10,000 would require it to rise nearly 5 times in value within a relatively short period of time. But there are several good reasons why that might be more likely than you think. Let's take a closer look.
Ethereum's market dominance
While it might be fashionable to talk about all the upstart cryptos challenging Ethereum -- most notably Solana (SOL -5.96%) -- the fact remains that Ethereum still dominates in just about every key niche of the world of blockchain-based smart contracts.
Take decentralized finance (DeFi), for example. According to the leading metric used to calculate DeFi strength (Total Value Locked, or TVL), Ethereum is the market leader by a wide margin. Ethereum currently accounts for 56% of all TVL in the blockchain world. By way of comparison, Solana's market share is less than 3%.
In a best-case scenario, Ethereum will continue this market dominance over the next five years. In doing so, it will position itself at the forefront of every major blockchain trend. Sure, some of these trends might flame out, as we saw recently with non-fungible tokens (NFTs) and metaverse tokens. But some of these trends could really take off and create an enormous amount of value along the way.
Spot ETF approval on the way
There are also a number of upcoming catalysts that could lead to a sustained rally in Ethereum's price. Chief among these is the potential introduction of a spot ETF product for Ethereum.
These new Ethereum ETFs are expected to galvanize the same type of market enthusiasm as the new Bitcoin ETFs. In fact, immediately after the spot Bitcoin ETFs started trading, the price of Ethereum spiked, largely based on this assumption. Right now, it looks like SEC approval of a spot Ethereum ETF could happen as early as May. Assuming that there are no market glitches related to the new Bitcoin ETFs, approval now looks likely.
The big question is what type of effect this approval might have on the price of Ethereum. The current assumption is that institutional investors will choose to allocate at least 1% of their portfolios to crypto. Presumably, the lion's share of that money would flow into Bitcoin. But some portion of that money would flow into Ethereum as well, and that could steadily push up the price of Ethereum over time.
How likely is the $10,000 price forecast?
A price target of $10,000 by the year 2030 might sound outlandish, but it's actually more conservative than other price targets for Ethereum. If you look across the crypto industry, you can find price forecasts of $50,000 and higher for Ethereum. It all really depends on how fast you think Ethereum can grow over the next half-decade.
Image source: Getty Images.
For example, in 2022, Cathie Wood of Ark Invest predicted that Ethereum would have a market cap of $20 trillion by the year 2030. Given Ethereum's current circulating coin supply of 120 million, that would imply a future price of approximately $170,000 per coin! Moreover, Wood has suggested that Ethereum could outperform Bitcoin in the next crypto market rally and potentially even "flip" Bitcoin in terms of overall market cap.
Granted, that $170,000 price prediction was made amid all the buzz and hoopla surrounding The Merge, which saw Ethereum radically overhaul its blockchain to prepare for the next wave of growth. But it gives you an idea of how high some investors think Ethereum could soar in the next few years.
What needs to happen next
From my perspective, a few things need to happen next in order for Ethereum to hit that magical $10,000 price point as early as the year 2030. For one, we need to see approval of the spot Ethereum ETFs. That would make Ethereum much more attractive to both retail and institutional investors. It would also be great to see Ethereum continue to make major upgrades to its blockchain, so that it becomes even faster, cheaper, and more efficient to use.
The only problem, really, is what to do about all those pesky Ethereum challengers. They appear to be growing faster than Ethereum and, in some cases, innovating much faster than Ethereum. Even Cathie Wood has acknowledged this.
So Ethereum reaching a price of $10,000 is by no means a slam dunk. Even in the best of all possible worlds, it takes many years of frankly unrealistic price gains to get there. But if the entire crypto industry continues to grow and mature, and if Ethereum maintains its dominant market role along the way, it just might happen.
