Ethereum
Is Ethereum a No-brainer Buy After Bitcoin Halving?
If history is any guide, Ethereum could be on track to post stellar gains during the current Bitcoin halving cycle.
THE Bitcoin (Bitcoin The 0.52% halving that took place on April 19 was one of the most anticipated events of the year for cryptocurrency investors. Three previous halving events, in 2012, 2016, and 2020, led to spectacular gains for Bitcoin, and the expectation was that this year’s halving would kick off a new bull market cycle.
What many investors may not realize, however, is that other cryptocurrencies can also post spectacular gains once the Bitcoin Halving the cycle begins. One crypto on my radar right now is Ethereum (ETH 0.33%), which could be on track for rapid price appreciation over the next 12 months. Let’s take a closer look at why.
The Impact of Bitcoin on the Ethereum Ecosystem
Keep in mind that Ethereum is both a cryptocurrency and a blockchain ecosystem. This is important because any new bullish sentiment around Bitcoin tends to benefit the components of these blockchain ecosystems, simply because of the greater interest investors have in all things crypto. This can include everything from non-fungible tokens (NFT) to Decentralized Finance Exchanges (DeFi), all built on the Ethereum blockchain.
Image source: Getty Images.
In many ways, the Bitcoin halving is a rising tide that lifts all blockchain boats. That’s exactly what happened during the previous Bitcoin halving cycle that began in May 2020. The growing excitement around the Bitcoin halving led investors to look for other cryptocurrencies that could benefit from it, and that naturally led them to Ethereum, which has the largest and most diverse blockchain ecosystem of all cryptocurrencies.
Due to the influx of new capital into the Ethereum ecosystem from cryptocurrency investors, the value of Ethereum began to skyrocket. Over a 12-month period from the date of Bitcoin’s halving in May 2020, Ethereum surged by over 1,732%.
Ether / US Dollar Chart by TradingView
Of course, there’s no guarantee that the same phenomenon will happen for Ethereum in 2024. After all, past performance is no guarantee of future performance. But there are so many use cases for Ethereum that I’m increasingly confident that investors will find new sources of value within its sprawling blockchain ecosystem.
New Ethereum Spot ETFs Launched
The second reason why Ethereum could surge in the post-halving cycle has to do with the imminent launch of the new spot Ethereum ETFsThe Securities and Exchange Commission (SEC) officially gave the green light to these new Ethereum ETFs in late May. Coincidentally, this date coincides with the Bitcoin halving in mid-April. So it’s only a matter of time before investor money starts pouring into these ETFs, helping to drive up the price of Ethereum.
Admittedly, investor demand for spot Ethereum ETFs is not as strong as for ETFs spot Bitcoin ETFs. But as much as $3 billion could flow into these ETFs by the end of 2024. If nothing else, this new influx of money would help absorb any further selling pressure in the cryptocurrency market.
How far can Ethereum go?
The combination of these two factors could propel Ethereum higher over the next 12 months. A growing number of analysts and investors now believe that Ethereum could return to its all-time high of $4,891 by the end of 2025. And, from there, Ethereum could climb as high as $22,000 by 2030, according to investment firm VanEck.
Clearly, there are a lot of elements that need to come together for Ethereum’s value to skyrocket. So keep an eye on how sentiment around the Bitcoin halving evolves and how that influences investors’ perceptions of the value that can be unlocked within blockchain ecosystems. If history is any guide, Ethereum may well end up being the most obvious buy of this Bitcoin halving cycle, just as it was in 2020.
Dominique Basulto has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.