#1 Best Cryptocurrency to Buy Before Reaching $1 Trillion Value, According to Cathie Wood

When it comes to predicting the future direction of the cryptocurrency market, perhaps no one has a higher profile than Ark Invest’s Cathie Wood. She famously made a $1 million price prediction for 2022. bitcoin (BTC -1.75%). And she didn’t shy away from making truly surprising predictions about other, lesser-known cryptocurrencies.

Take away Ethereum (ETH -3.50%), for example. Cathie Wood suggests that Bitcoin will surpass $1 million, while also suggesting that Ethereum could become a $20 trillion asset by 2030. And earlier this year she even suggested that Ethereum might perform better. Bitcoin during the next cryptocurrency bull market rally. So should you buy Ethereum now?

Cathie Wood’s Optimistic Outlook on Ethereum

It’s one thing to make a price prediction out in the sky, but it’s another thing to fully back that prediction up with cold, hard numbers. This is something that Cathie Wood of Ark Invest does very well. Her company’s annual “Big Ideas” report is a must-read for anyone who really wants to dig into the numbers and understand which cryptocurrencies are likely to soar even higher.

According to Wood, Ethereum is leading the way in creating a new decentralized financial system built on smart contracts, decentralized applications, and blockchain technology. Collectively, this is known as DeFi (for decentralized finance) and is one of the areas that Ethereum currently absolutely dominates. According to one of the leading metrics known as Total Value Locked (TVL), Ethereum accounts for nearly 60% of all DeFi activity globally.

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So the most optimistic investment thesis is: Ethereum will completely disrupt the traditional financial system, ushering in a new golden age of DeFi. This means lower transaction costs for customers, new revenue opportunities for financial service providers, increased financial innovation overall, and more opportunities for everyone, not just the rich, to participate in global economic growth. As Ark Invest explains in its latest “Big Ideas” report, this could be a $20 trillion market opportunity.

But do the numbers make sense?

Overall, the investment thesis for Ethereum seems sound. After all, Ethereum is still the world’s leading smart contract blockchain network, despite the emergence of numerous new competitors. And DeFi remains one of the hottest sectors in the blockchain world. But my only worry is that the numbers might not mean much.

Take, for example, the bold claim that Ethereum could become a $20 trillion asset by 2030. Considering there are 122 million Ethereum tokens in existence, this implies a price of approximately $165,000 per token. The current market price of Ethereum is around $3,000, so its value will increase by more than 5,000% in the next 10 years. To put the $165,000 price prediction into context, Ethereum’s all-time high is only $4,892.

Also, think about what a $20 trillion valuation would mean. Among other things, this means that Ethereum could surpass Bitcoin as the world’s most valuable cryptocurrency. Even if Bitcoin hits its $1 million price target, its implied value would only be $20 trillion, similar to Ethereum.

And if Ethereum and Bitcoin both boast market caps of a cool $20 trillion, the entire cryptocurrency market, currently worth $2.4 trillion, will be worth at least $40 trillion within 10 years. This is similar to the overall value. S&P 500 today!

Can Ethereum reach a market capitalization of $1 trillion?

Therefore, I am not as optimistic as Cathie Wood when it comes to Ethereum. She sees the value of Ethereum growing 50x over the next decade, but believes the valuation multiple is quite low. For the sake of argument, let’s assume the valuation multiple is a much more conservative 3x. This is still enough to bring Ethereum’s market capitalization to $1 trillion.

If you are considering purchasing Ethereum, I think you should keep this $1 trillion figure in mind. Yes, if all goes as planned and Ethereum dominates the global financial system using its decentralized blockchain network, it could eventually soar much higher. As Wood originally predicted, it could eventually become a $20 trillion asset.

But I’m very happy that we live in a world where Ethereum is only worth $1 trillion. That would put it in the same valuation zone as today’s biggest tech stocks. If you view Ethereum as an aggressive play on blockchain technology’s ability to disrupt traditional financial systems, now may be the time to buy.