After the advent of Bitcoin around 10 years back, many cryptocurrency projects emerged in the world of cryptocurrency. Some of these currencies improved upon what the first cryptocurrency had to offer. Litecoin and XRP are the two major cryptocurrencies that hit the market soon after the launch of Bitcoin. But what changed the crypto market is the introduction of Ethereum. In this article, we are going to find out if it is a good decision to invest in Ethereum. Read on to find out more.
Ethereum is the leading currency after Bitcoin. Unlike what most people believe, Ethereum is much more than just a payment cryptocurrency. In fact, it is like a powerful supercomputer that allows smart contracts for expert developers to benefit from and develop decentralized applications.
Eventually, this led to the boom of Initial Coin Offering (ICO) in 2017. During the same year, thousands of fresh ERC-20 were built on the powerful blockchain of a theorem. Today, many of these projects have lost their value. But the interest explosion gave a boost to the value of Ethereum. Today the value of one token of ETH is more than $3000.
Although the ICO boom has ended in smoke, the value of ETH has been going up due to a lot of factors, such as the rise of the NFT market, the growth of liquidity swap platforms and decentralized exchanges, and the increasing decentralization of finance.
Without further ado, let’s talk about a few convincing reasons why ETH is still a good investment. We will also take a look at some of the pros and cons of this currency and guide you as to how you can invest in it.
Investing in Ethereum
If you invest in Ethereum, you are actually investing in the future of finance. As a matter of fact, this smart contract platform is all set to replace the classic back-end of Wall Street. It has already started replacing the bonds and shares of the company with tokens connected to smart contracts.
According to some experts, Ethereum has a lot more potential than Bitcoin. It is partly because the platform can help experienced developers to keep developing and innovating. For example, it has introduced the DeFi trend recently.
Today, you can see new projects every other day that make significant changes to the world of finance. Besides, it introduced new crypto terms such as liquidity pooling and yield farming.
It is important to note that most of the DeFi projects are scams or don’t have any real-world application. However, you can also find some diamonds in the rough. With good DeFi projects, it is possible to borrow and lend without permission. And these projects have the potential to disrupt conventional finance.
The price of Ethereum depends on the NFT market as the majority of NFTs are developed on an Ethereum smart contract standard. Since both DeFi and NFTs are powered by Ethereum, this platform acts as a gateway to make payments for transactions. Therefore, users have to purchase ETH, which is why the prices of this cryptocurrency have been going up.
Regardless of the success or failure of these projects, the investors will be the beneficiaries. Recently, the launch of DeFi has helped ETH perform much better than Bitcoin and almost every other altcoin. Therefore, it is safe to say that investing in this currency is a stroke of genius in 2021.
So, if you follow this trend and invest in Ethereum, we can say that you may earn a great reward on your investment dollars.
Is Ethereum a Good Investment?
For Ethereum, 2020 was a lucky year as it laid the foundation for this cryptocurrency. Experts in the industry predict that the value of an ETH will continue to rise for years to come.
Since 2020, DeFi has touched a milestone of over $90 billion in value. Most of it is in ERC20 or ETH tokens based on Ethereum. The DeFi and NFTs boom has increased the demand for ETH. Therefore, the value of this cryptocurrency has been going up. For better scalability and long-term investment, they are going to launch an ETH 2.0 update.
Is it a great idea to Invest In Ethereum In 2021?
For ETH, the current year has proven to be a bullish start. At the beginning of this year, the price of one coin touched an all-time high of 2000 euros. The ecosystem of ETH has expanded so much that newcomers may not be able to beat it.
Today, the Total Value Locked is over $90 billion. If this trend continues, the demand for ETH will go up while the supply of the tokens will go down. Around one-fifth of all ETH, tokens are now Locked Up.
According to the news, there is going to be another update called EIP 1559, which will have an impact on the supply of ETH. As a result, ETC will become scarcer with time. These factors will make Ethereum a much better choice than Bitcoin.
Ethereum Fundamental Analysis
Apart from the decentralized finance trend, almost all of the metrics have enjoyed growth. And this includes the total number of ETH addresses that are active so far.
Besides, the ETH 2.0 upgrade has addressed the bottlenecks of ongoing throughput faced by the network. On exchanges, the number of ETHs has also been plummeting.
Ethereum Sentiment Analysis
Due to the rise of NFT and DeFi, Ethereum sentiment has become quite strong. It is partly because of the ICO boom when ETH prices crossed $1,400 per token, which was a great achievement.
Today, both NFT and DeFi trends are quite promising and sustainable due to the decentralized movement. Although the ICO trend won’t stay anymore, NFTs and DeFi will be there. Therefore, Ethereum has crossed the previous highest value figure. Today, it’s valued at more than $3,000. Earlier, it hit an impressive value of $4,400 per token.
Over the past year, engagement, sentiment, and social volume have gone up significantly. During this time, one of the most profitable strategies was to short Ethereum.
Since ETH is quite promising and has great potential as an investment, industry experts keep an eye on the trends to make predictions about the performance of the asset. So, we can say that their opinion regarding the expectations and price predictions can be quite dependable.
According to the co-founder of Blockfyre, Simon Dedic, the value of Ethereum will reach $9000 per coin in the near future. He has also the Managing Partner at moon Rock capital. He further said that the bear trap might result in $9,000 ETH despite the fact that there is a trend to sell the assets at a low price. According to Galaxy trading, we expect that the value of one token of Etherium may reach $10,000 by the end of this year.
Although this figure seems a bit unbelievable, it is not beyond possibilities since we already have seen the value of Bitcoin skyrocketing. So, nothing is beyond expectations so far. These claims can turn into reality in the near future if nothing goes wrong in the meantime.
According to another expert, Joe McAnn, who is an angel investor, the ETH will break all the records by hitting an all-time high figure of $50000. Anthony Sassano, an independent Ethereum educator, investor, and advisor, one Ethereum coin will sell for over $150,000 by the end of 2023.
Methods To Invest In Ethereum
Although you cannot get another opportunity to purchase ETH during the token sale again to enjoy an enormous return on investment, you cannot just say that this cryptocurrency cannot be an ideal form of investment. It still has a lot of potential for new investors like you.
A few years back, it was quite difficult to purchase ETH. On the other hand, you can just make a few clicks online and purchase your desired number of coins from the comfort of your home. So, if you want to invest in ETH, you can choose from some of the most common methods that are listed below.
Buy and Hold
Although this strategy is quite simple and strong, it is one of the riskiest ones for volatility. We all know that the world of crypto is known for price fluctuations. For example, at one point in time, traders sold one coin for $1400. And then there was a time when the same coin was valued at only $80.
In 2019, the value of one ETH went up from $80 and reached $380. Interestingly enough, it went back to $90 in 2020. So, those who invested a lot of money in it in 2019 might have been sad in 2020. This is how the value of cryptocurrencies fluctuates, and these price fluctuations are quite unpredictable.
It is clear that Ethereum did a great job in 2020, and it is doing even better in 2021. However, we cannot say for sure if it will continue to go up in value. It may choose to turn around at any time without giving any warning. Therefore, if you want to be on the safe side, we suggest that you trade rather than invest. This is how you can put together a great strategy for trading ETH.
Unlike a long-term investor who holds through downtrends, you can become a spot trader and sell your ETH for cash preventing losses. However, it is important to keep in mind that you cannot earn a profit from the downtrends if you are on a spotting platform.
In 2020, the traders who purchased ETH at low prices would have made a great return on investment in 2021. After all, a profit of $4000 per ETH is more than amazing.
With derivatives trading, you can make money from drawdowns as well. This is just like you can profit from uptrends. If you open a short or long position, you can earn a good deal of profit regardless of the market moves.
In the case of derivatives trading, using CFDs presented by an advanced crypto trading platform, such as PrimeXBY, you could have earned $400,000 from the small sum of $4,000 with leverage.
As for as total capital gains are concerned, it is quite clear that depending on CFDs can beat spot trading or holding. However, it is important to keep in mind that trading comes with its own set of risks. Therefore, if you want to be on the safe side, we suggest that you put together an effective risk management strategy.
Apart from this, with CFDs, you could have chosen to shorten ETH and earned profits from the crash.
Pros & Cons of Ethereum
It is important to keep in mind that ETH is on the list of highly volatile cryptocurrencies. Apart from this, it is a great polarizing technology. Apart from this, the market is going through a lot of changes. Although there have been rumors that Ethereum will be out of the market pretty soon, these rumors are far from reality. As far as usage and utility are concerned, Ethereum has no competitors.
- ETH is the hottest crypto token because of NFTs and DeFi
- Ethereum broke all the records and the value of the one token may go up even more
- According to predictions, ETH 2.0 is round the corner
- Recently, ETH struggled with scaling because of the high demand for DeFi.
- ICO treasures still hold a lot of Ethereum
- There are a lot of competitors out there, which could beat Etherium one day
- The fee has been going up, which is a source of discouragement for a lot of investors
How Much should you Invest In Ethereum?
Currently, the value of one ETH token is around $3,000. However, you can purchase a fraction of Ethereum on most trading platforms or exchanges. In other words, there is no real foundation as far as Ethereum investing is concerned. So, if you want to avoid losses, we suggest that you don’t invest more than what you can afford to lose.