Why Ethereum Is On The Rise

Why Ethereum Is On The Rise

TipRanks

Are we seeing some signs of danger in the markets? At first glance, it wouldn’t seem so. The S&P 500 is sitting just below its record high, as is the Dow Jones average. The big tech giants – Amazon, Apple, Alphabet, Facebook, and Microsoft – all posted great results in their recent earnings reports. And yet, they are leading the declines in the NASDAQ. According to Morgan Stanley equity strategist Michael Wilson, we’re in for a volatile ride, at least in the near-term. “With the S&P 500 making new highs every day, few seem worried… rather than getting excited about reopening, we are getting more concerned about execution risk and what’s already priced in,” Wilson noted. “Whatever correction the market experiences this year, we are likely to make higher highs next year. The goal as an investor is to navigate the… transition, avoid the stocks with the biggest drawdowns and be in position to capture the next leg.” So, let’s take this advice, and look for ways to protect the portfolio in the short term while staking a position for the longer term. That’s a strategy which will naturally draw investors toward dividend stocks, the classic defensive play. We’ve used the TipRanks database to pull up two dividend players that combine a Strong Buy sentiment from Wall Street with a yield of at least 7%. Let’s take a closer look. New Residential Investment (NRZ) We’ll start with a real estate investment trust (REIT), since these companies have a reputation as solid dividend payers. That’s in part an artifact of their position in regard to tax regulation; they are required to return a certain percentage of profits directly to shareholders, and the dividend is often a convenient vehicle for compliance. New Residential Investment is typical of its sector, holding a $6 billion investment portfolio, of which just over half is mortgage servicing rights. In its recent 1Q21 financial release, New Residential showed a net income of $301 million, up from $101 million at the end of Q4. The company declared a quarterly dividend of 20 cents per share; the payments totaled $82.9 million. At the declared rate, the dividend annualizes to 80 cents per common share, for a yield of 7.5%. This compares favorably to the ~2% yield found among S&P-listed companies. NRZ shares are up 77% in the past 12 months, gaining as the company switched from net losses at the height of the corona crisis to profitability in the last four quarters. To take advantage of the share appreciation, and to raise additional capital, the company announced a public offering of shares in April. The sale generated gross proceeds of $522.4 million on 51.7 million shares sold. The funds raised were used to acquire Caliber Home Loans, with plans to integrate the acquisition into NRZ’s wholly owned mortgage origination service. The transaction is expected to close in Q3 of this year. Covering the stock for BTIG, analyst Eric Hagen writes: “[We] think the company has the capital to be acquisitive in bulk sales transactions as some originators potentially look to offload more thinly capitalized MSRs if origination volume slows more meaningfully. It confirmed the $500 million of capital raised in connection to the Caliber deal was about $0.15 dilutive to NAV, so book is around $11.20. The stock is less than 0.93x book, and about 6.5x forward earnings assuming a 15% ROTCE.” Hagen rates NRZ a Buy, and his $13 price target implies a 25% upside for the year ahead. (To watch Hagen’s track record, click here) Hagen is no outlier in his bullish opinion here. Of the 10 recent analyst commentaries on this stock, 9 recommend it to Buy, against a single Hold. The $12.69 average price target is almost as bullish as Hagen’s, and suggests an upside of ~22% from the current trading price of $10.38. (See NRZ stock analysis on TipRanks) Enterprise Products Partners (EPD) We’ll switch gears now, and take a look at an energy company. Specifically, a midstream company. Enterprise Products Partners controls over 50,000 miles of pipelines, along with facilities capable of storing 160 million barrels worth of oil and 14 billion cubic feet of natural gas. In addition, Enterprise has shipping terminals in the state of Texas, on the Gulf Coast. As the US economy has reopened, demand for fuel has increased – which in turn increased the flow of fuel through Enterprise’s system. The company’s financials have been rebounding since the second half of last year, and the recent 1Q21 report showed $9.1 billion at the top line, the best result in the last two years. EPS came in at 61 cents per share, flat year-over-year, but higher than the last three quarters. Enterprise declared a Q2 dividend of 45 cents per common share, the second quarter in a row at this level. The current payment is backed by the company’s $1.7 billion in distributable cash flow. The annualized payment of $1.80 per common share gives a yield of 7.7%. Among the bulls is Raymond James analyst Justin Jenkins, who sets a Strong Buy rating on EPD shares, along with a $26 price target. (To watch Jenkins’ track record, click here) Backing his stance, Jenkins writes: “While Enterprise (EPD) has not been immune to energy industry challenges, the asset base has continued to show resilience in the difficult environment. Looking forward, EPD’s unique combination of integration, balance sheet strength, and ROIC track record remains best in class, in our view. We see EPD as arguably best positioned to withstand the volatile landscape… This is a compelling opportunity for entry into ownership of one of the best positioned MLPs…” Overall, Wall Street’s analysts are sanguine about EPD’s path forward, as evidenced by the unanimous Strong Buy consensus rating, supported by 8 Buy recommendations. The average price target, at $28.75, is more bullish than Jenkins’ and suggests a one-year growth potential of 24% for EPD. (See EPD’s stock analysis at TipRanks) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Should You Invest in Ethereum Right Now?

When it comes to cryptocurrency, Bitcoin (CRYPTO:BTC) is the big name in town. But Ethereum (CRYPTO:ETH) has had an incredible year.

Since the beginning of the year, Ethereum’s price has soared by 435%. Over the last 12 months, it’s increased by more than 1,700%. The price of Bitcoin, by comparison, has increased about 100% so far this year, and 518% over the past 12 months.

Run-ups like these can be difficult to ignore, and some experts believe Ethereum has a promising future. But is it time to buy?

What is Ethereum?

First, it’s important to distinguish the difference between Ethereum and Ether. Ether is a type of cryptocurrency, similar to Bitcoin. Ethereum is the blockchain technology behind Ether.

Ether and Bitcoin share many similarities. They’re both digital currencies that can be used to make transactions. Like Bitcoin, you can invest directly in Ether by purchasing coins. Ether is significantly more affordable than Bitcoin, however. Ether costs around $4,100 per coin, as of this writing, while Bitcoin costs around $57,400 per coin.

It’s also possible to invest in the Ethereum technology. Some of your options include:

Investing in Ether directly: By purchasing Ether coins, you’re also supporting the Ethereum technology behind the cryptocurrency.

By purchasing Ether coins, you’re also supporting the Ethereum technology behind the cryptocurrency. Investing in a managed fund: Funds like Grayscale Ethereum Trust OTC:ETHE)

Funds like Investing in certain stocks: Buying stocks that have some connection to Ethereum technology is another option. Companies like NVIDIA and AMD, for example, build computer chips that are often used during the coin mining process.

Ethereum is a widely used technology that has a variety of applications. But before you invest, it’s important to understand the advantages and disadvantages.

Considering the advantages

One of the biggest advantages of the Ethereum blockchain is its flexibility. While it’s mostly known for hosting Ether, it’s also used for nun-fungible tokens (NFTs), decentralized finance, and enterprise blockchain solutions.

In other words, it has applications outside the cryptocurrency world. Even if cryptocurrency itself doesn’t succeed over the long run, Ethereum could still be used in other ways.

In addition, one major criticism of cryptocurrency, specifically Bitcoin, is how energy-intensive it is. In fact, researchers from the University of Cambridge estimate that the Bitcoin mining process uses more electricity than the entire country of Sweden.

Ethereum, however, aims to be more environmentally friendly. Developers of the technology are currently working to shift how coins are mined to make the process more energy-efficient. This could give Ethereum an advantage over Bitcoin, especially among environmentally conscious investors.

Also, as the Ethereum network undergoes changes, some of the Ether coins could be destroyed in the process. This could actually be a good thing for investors, however, because a smaller supply of Ether could make it more valuable and drive up its price.

Understanding the risks

Despite its flexibility and wide range of applications, there are still risks involved in investing in Ethereum and Ether.

For one, you’re almost guaranteed to experience significant volatility – especially if you invest directly in Ether. Cryptocurrency is a risky investment in general because it’s highly speculative at this point. Some experts also believe we’re in a crypto bubble and that digital currencies like Bitcoin and Ether are overvalued. If that’s the case, prices could plummet when the bubble bursts.

Also, new laws and regulations could pose a threat to Ethereum’s future. Investing in cryptocurrency can come with hefty taxes, which could limit the number of people willing to invest. In addition, lawmakers are still figuring out how to regulate the crypto market. This could result in more volatility and greater risk.

Before you invest in Ethereum, think about your tolerance for risk. Would you be able to sleep at night if your investment fell by 20%? What about 50%? Ethereum is a volatile investment, so be sure you’re comfortable with risk before you buy.

Finally, if you do choose to invest in Ethereum, make sure you have a well-diversified portfolio, and only invest money you can afford to lose. By keeping most of your money in safer investments, you can limit your risk in the event that Ethereum takes a turn for the worse.

Ethereum could end up being a smart investment, but it’s not right for everyone. Be sure to weigh the pros and cons as well as consider your own tolerance for risk. Whether you choose to invest or not, be sure you’re making this decision carefully.

Ethereum price surges above $4,000 but overshadowed by dogecoin buzz. What is Ether?

Ether prices on the Ethereum blockchain have been steadily and quietly carving out new highs as buzz in the crypto has centered predominantly on the fervor around more speculative assets like dogecoin DOGEUSD, -4.47% in recent weeks.

However, for many blockchain enthusiasts, the rise of Ether ETHUSD, +4.49% is a significant development that is driven by the growing importance of the world’s second-largest crypto on the planet behind bitcoin BTCUSD, -1.06% .

Check out: Ether hits record high, crests $4,000 milestone

At last check, Ether was changing hands at $4,140.95 on CoinDesk, up 5.7% on Monday, with that climb bringing its year-to-date gain to nearly 460%. Ether prices traded at all-time high at $4,213.46 around Monday.

By comparison, bitcoin was flat on the day at $57,444.65, and up more than 97% so far in 2021.

Here’s what investors need to know about the digital asset and its rise:

What is Ether?

Ether is the coin, launched in 2015 by a team including Vitarik Buterin, Charles Hoskinson, and Gavin Wood, that has come to be known for the ease by which software developers can write bespoke programs atop its network. Sometimes these applications are referred to as smart contracts.

Ether is similar to bitcoin inasmuch as it is a digital asset that is decentralized, (i.e., no one party controls it), and uses distributed-ledger technology known as blockchain that records transactions immutably. The blockchain network is supported by a digital-mining community.

Miners are the record-keepers on blockchains like bitcoin and Ether and they are rewarded with coins for their efforts.

How is Ether used?

Bitcoin’s major selling point has been its claim by enthusiasts as a store of value and as a currency to a lesser extent, but Ethereum’s network is viewed by many as a powerful, open-source, decentralized backbone off which a number of applications can be based.

Ether values have been supported partly by growing appetite for nonfungible tokens, or NFTs, and other corners of the nascent digital crypto market supported on the Ethereum blockchain.

Momentum, however, is building around so-called decentralized finance, or DeFi, projects, which are also mostly supported on the Ethereum network.

DeFi are applications and services that can facilitate borrowing, lending and trading crypto assets without an intermediary. It is seen as a possible threat to traditional financial markets, or as an application that could be more readily used to enhance buying, selling and lending on Wall Street.

A research report published on the Federal Reserve Bank of St. Louis’s website recently said that DeFi has some issues with security but if addressed could shake up the financial industry.

“However, if these issues can be solved, DeFi may lead to a paradigm shift in the financial industry and potentially contribute toward a more robust, open, and transparent financial infrastructure,” wrote Fabian Schär, a professor for distributed-ledger technologies and fintech at the University of Basel and the managing director of the Center for Innovative Finance.

“It is little wonder why institutions are getting excited about the technology,” wrote Fawad Razaqzada, market analyst at ThinkMarkets in a Monday note.

“ETH uses blockchain not only for payments but also for storing computer code which can have many real-world applications,” he wrote.

Gaining Ether prominence

The European Investment Bank, a lender owned by European Union member states, issued $120 million worth of two-year bonds last week on the Ethereum network, a first for such a large-scale issuance.

What’s the outlook?

Nigel Green, chief executive and founder of deVere Group, had forecast that Ether would be at $5,000 by today. His prediction so far is a bit off the mark but he has been mostly right directionally.

It’s hard to say where Ether prices go from here but some speculate that momentum is only just beginning.

“The good thing is that it is still only a beginning for this rally as money continues to pour into Ethereum,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a daily note.

“In fact, there is strong evidence that traders and investors are actually liquidating small positions in Bitcoin and putting that money in Ethereum as they believe that this coin is still massively undervalued,” he said.

Ether’s gains make most traditional asset returns this year look mundane. Gold futures GC00, -0.66% are down 3% year to date, while the Dow Jones Industrial Average DJIA, -0.98% and S&P 500 index SPX, -1.27% are up by at least 12% and the Nasdaq Composite Index COMP, -2.02% has gained over 5% so far in 2021.

Highly speculative dogecoin, which is up over 10,000% this year, has drawn much of the attention in the crypto world, lately. However, many investors in blockchain view Ether as a more serious digital asset with more utility than dogecoin.

Read: What the dogecoin army is saying as the cryptocurrency’s tumble triggers a bearish break in the long-term trend line