Ethereum
3 Reasons to Buy Ethereum While It’s Below $4,000
Is Ethereum on its way to a new all-time high? These three factors say yes.
In the first half of 2024, Bitcoin (BTC -1.21%) has captured the imagination of crypto investors. But don’t sleep Ethereum (ETH 0.18%). Up 54% year to date, it has largely kept pace with Bitcoin and has a new catalyst that could send it soaring in the second half.
Maybe it’s time to put Ethereum on your investment radar. There are three good reasons why it could surpass the $4,000 mark on its way to a new all-time high.
The new ETFs
The big catalyst, of course, is the imminent launch of the new Ethereum spot ETFs. If they experience approximately the same success as the spot Bitcoin ETFs, they could cause the price of Ethereum to skyrocket. In the first six months of the year, spot Bitcoin ETFs attracted $30 billion from investors, leading the price of Bitcoin to skyrocket 60%. The current view is that the new Ethereum spot ETFs could raise up to $3 billion in their first six months.
The only question, really, is when the new ETFs will begin trading. The initial consensus was at the end of May. This was then pushed back to the end of June. And now SEC Director Gary Gensler says it will be sometime before the end of the summer. Maybe when you return from summer vacation you can buy them.
Ethereum Market Dominance
An underrated fact about Ethereum is how dominant it is in many niches of the blockchain world. From decentralized finance (DeFi) to games, web3, and the metaverse, Ethereum is clearly the market leader. Its blockchain technology powers many of the most powerful and exciting applications of tomorrow. This means more users, more developers, more active wallets, more transactions and more cash flow than any other blockchain ecosystem.
Image source: Getty Images.
Case in point: In the world of DeFi, Ethereum currently accounts for 60% of all total value locked (TVL), one of the most important metrics for blockchain performance. For comparison, its main rival Solana (GROUND 0.50%) only holds a 4% market share. Other promising rivals, such as Sui And Aptos — barely appear as flashes on radar. Thus, this group of “Ethereum killers” may pose less of an existential risk to Ethereum than initially feared.
New blockchain upgrades
I can’t think of another cryptocurrency that’s getting more attention for its blockchain upgrades than Ethereum. It followed The Merge (a massive blockchain upgrade) with a number of smaller technical upgrades intended to make its blockchain faster and cheaper to use. Last year we had Shappella. Earlier this year we had Dencun. And now the buzz is building for the next upgrade, known as Prague-Electra.
There are two reasons why these incremental upgrades are so important. First, they make it easier for Ethereum to fend off rivals. Yes, Solana may be faster and cheaper to use right now, but Ethereum is doing everything it can to close the gap. The ultimate goal is the ability to process 1 million transactions per second, and each new upgrade brings Ethereum closer to this goal.
Additionally, each new upgrade helps build confidence in Ethereum’s roadmap for the future. Unlike other cryptocurrencies, which often seem to have a haphazard overall development, Ethereum establishes a roadmap at the beginning of each year and patiently explains how all the steps on that roadmap fit together. I’ve always viewed this process as similar to the way publicly traded companies provide guidance on future earnings.
How high can Ethereum go?
Considering these three factors, I think there is a reasonable chance that we could be talking about a new all-time high of $5,000 for Ethereum by early 2025. This represents a 40% gain from the price current $3,500.
But $5,000 might be way too low a future projection for Ethereum. It is not difficult to find analysts predicting a price of $10,000 for Ethereum. And investment firm VanEck believes Ethereum is on track to hit $22,000 by 2030.
In many ways, it depends on how well these new Ethereum spot ETFs perform. If late summer arrives and stocks are still not trading, or if new investor flows are disappointing, it may be time to lower expectations. If you are willing to take on this risk, it may be time to start thinking about investing in Ethereum while its price is still trading below $4,000.
Dominique Basulto has positions in Bitcoin, Ethereum, SUI and Solana. The Motley Fool holds positions and recommends Aptos, Bitcoin, Ethereum, SUI and Solana. The Mad Motley has a disclosure policy.