Ethereum: Invest Or Avoid?

As of May 2024, Ethereum (ETH) is the second-most-valuable cryptocurrency on the market, with a market cap of $290 billion. However, it has been losing investor interest to Bitcoin and newer cryptocurrencies like Solana and Avalanche, which offer similar or superior capabilities. Ethereum's performance in 2023 was lacklustre compared to its rivals, with a 90% increase in value compared to triple-digit gains for its competitors.

Despite this, many analysts believe that Ethereum is a good investment and will perform well in 2024. This is due to several factors, including its strong fundamentals, the likelihood of a crypto bull market, and upcoming upgrades to the Ethereum blockchain, which will improve its performance and could attract more investment.

Ethereum's TVL (Total Value Locked) is roughly $31 billion, more than 55% of the TVL across all blockchains with DeFi capabilities. It also has twice as many active developers as Polkadot and nearly three times more than Solana, as of October 2023. This extensive developer community is a significant competitive advantage and ensures long-term viability, as well as attracting more projects.

Ethereum's price has been volatile since its launch in 2014, with stratospheric increases and gut-wrenching drops. It is currently trading at around $3,121.81, about 50% off its all-time high of nearly $4,900.

In summary, while Ethereum has been losing investor interest to other cryptocurrencies, it remains a strong investment option due to its dominant position in the market, strong fundamentals, and upcoming upgrades.

Ethereum's price history

Ethereum's native token, Ether, was initially sold for just $0.31 per coin in its 2014 ICO, raising over $16 million. The price remained relatively stable until May 2017, when it first went above $100. In June 2017, it skyrocketed to $414, before correcting. By January 2018, Ether's price had peaked at $1,418, but it then fell sharply.

Ethereum's price continued to fluctuate over the next few years, with bullish momentum returning in 2021. Between February and May 2021, Ether's price more than tripled to set a new all-time high of $4,379. However, the price started to decline again, and by mid-2022, it had dropped below $1,000 due to the collapse of FTX and unfavourable macroeconomic conditions.

In 2023, Ethereum's price started to recover, reaching a yearly high of $2,120 in April. This positive trend continued into 2024, with Ether coming close to beating its all-time high when it hit $4,067 in March. As of July 2024, the price of Ethereum is around $3,000-$3,100, with some experts predicting further gains in the coming months and years.

The future for Ethereum

Ethereum has been described as a byword for innovation, offering a platform for global innovators to build projects and develop decentralised financial applications. Its appeal lies in its Ether currency, as well as the potential of its network.

Ethereum is second only to Bitcoin in market capitalisation, with a value of $286 billion compared to Bitcoin's $845 billion. As of February 2024, one bitcoin was valued at $43,000, while Ether was around $2,370.

Increasingly, Ether is becoming a safe-haven crypto asset, and with a spot Ethereum ETF awaiting approval and major network upgrades planned, some investors predict that 2024 could be the year that Ethereum emerges from Bitcoin's shadow.

Ethereum's performance against Bitcoin during the latest downturn was considerably stronger than in the past. This shift highlights a change in market perceptions, as investors no longer see Bitcoin as the only blue-chip asset in the crypto space. Ethereum is now also viewed as a "flight-to-safety" asset.

There are several factors that could positively impact Ethereum's price in the future. These include the introduction of staking, which allows users to stake tokens and earn rewards for validating transactions and adding to network security. The recent "Merge" upgrade also introduced a fee-burning mechanism, which reduces the overall supply of Ethereum and could support a rise in value.

A spot Ethereum ETF is also expected to be approved in 2024, which could result in billions of dollars flowing into Ethereum and pushing up its price.

Ethereum's strategic roadmap for 2024 includes plans to improve the speed and efficiency of transactions on its blockchain. If successful, this would make Ethereum faster and more cost-efficient than its rivals.

While there is always the possibility of downturns and regulatory scrutiny, the current landscape suggests a positive outlook for Ethereum. Its extensive developer community, first-mover advantage, and wide adoption all indicate that Ethereum has a strong future as a leader in the crypto market.

Is Ethereum a good investment?

Ethereum is a good investment, especially for those focused on the macro perspective. While the short-term outlook for financial markets is uncertain, Ethereum is strong in a macro sense. Its long-term utility and clear plan for future developments make it a strong long-term investment.

Ethereum's price has been marked by both appreciation and significant drawdowns. Since its launch in 2014, Ethereum has grown from an initial coin offering (ICO) of $0.31 to a price of around $3,121.81 as of March 2024. It reached an all-time high of $4,878.26 in November 2021. Ethereum's performance against Bitcoin during the latest downturn was considerably stronger than in the past. This highlights a shift in market perceptions, as Ethereum is increasingly viewed as another "flight-to-safety" asset.

Ethereum is the undisputed champion of the decentralised economy. Its total value locked (TVL) is worth roughly $31 billion and accounts for 55% of the TVL across all blockchains with decentralised finance (DeFi) capabilities. It is the clear-cut leader of decentralised innovation, with an extensive and flourishing ecosystem of tokens, decentralised exchanges, non-fungible tokens (NFTs), stablecoins, and much more.

Ethereum also has a robust developer community, arguably its most valuable asset, giving it a significant competitive advantage over other blockchains. Developers are responsible for creating applications, fixing issues, and introducing new features, all critical for the sustained success of a blockchain. Ethereum's developer community ensures long-term viability and attracts more projects.

There are several catalysts that could send Ethereum higher in the future. The approval of a spot Ethereum ETF could result in an influx of money into Ethereum. Additionally, Ethereum's next big upgrade, EIP-4844, will enable the processing of transactions on the Ethereum blockchain to become much faster and more efficient. This could theoretically allow the Ethereum blockchain to handle 100,000 transactions per second, up from about a dozen currently.

While the short-term potential is uncertain, Ethereum seems like a strong long-term investment. It has strong utility and a clear plan for future developments. By 2030, Ethereum could reach a price of between $7,500 to $10,000, an increase of 350% on the low end.

Ethereum's earning potential

Historical Performance

Ethereum has had a strong performance history since its launch in 2014, with a significant increase in value. During its initial coin offering (ICO), the price of ETH was just $0.31, and it has grown exponentially over the years. Despite fluctuations and downturns, Ethereum has shown a long-term upward trajectory, making it a potentially profitable investment for those with enough time.

Network Upgrades and Improvements

Ethereum has a proactive approach to developing and upgrading its network. The Merge in 2022 reduced energy consumption by 99.95%, and future upgrades are expected to further boost its performance, scalability, and transaction costs. These improvements enhance Ethereum's competitiveness and attractiveness to users and investors.

Decentralized Applications (dApps) and Developers

Ethereum is the most popular network for decentralized app (dApp) builders and developers, with thousands of major protocols, meme tokens, and NFT collections built on its platform. This extensive ecosystem provides investors with exposure to various aspects of decentralized finance. Additionally, Ethereum's large and active developer community ensures long-term viability and attracts new projects, contributing to its earning potential.

Total Value Locked (TVL)

Ethereum's TVL, the combined value of projects built on its network, exceeds $50 billion, far surpassing its nearest rival Tron ($9.8 billion TVL). This indicates a robust and valuable blockchain with a strong position in the market.

Staking and Yield Opportunities

The recent upgrade to proof-of-stake has introduced staking opportunities, allowing ETH holders to earn rewards for validating transactions and securing the network. This incentivizes long-term holding and provides an additional income stream on top of potential capital gains.

Expert Opinions and Price Predictions

Experts and analysts have varying opinions on Ethereum's future performance. Some predict significant price gains in 2024, citing upcoming network upgrades, the potential approval of a spot Ethereum ETF, and the strengthening of the layer-2 ecosystem. Others highlight the competition from rival blockchains like Solana and Avalanche. However, most experts agree that Ethereum has strong long-term growth potential, and its price could reach $5,000 by 2025 and $7,500 in five years.

Ethereum's value proposition

Ethereum's blockchain-based software platform allows for the sending and receiving of value globally through its native cryptocurrency, ether. However, it also has a range of other applications, including decentralised applications or "dApps", which are self-executing thanks to the use of smart contracts. These smart contracts are code-based programs stored on the Ethereum blockchain that automatically carry out certain functions when predetermined conditions are met. This functionality paves the way for various applications, including decentralised finance (DeFi), supply chain management, and many others.

Ethereum also has a strong security posture due to its decentralised nature, making it ideal for sensitive applications. Additionally, its native token, ether, has an unbounded supply, meaning there is no limit to how many can enter circulation, which can be attractive to investors.

Overall, Ethereum's value proposition lies in its ability to support complex, customisable transactions and its potential to disrupt the traditional financial system by providing a more efficient, transparent, and secure alternative.

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