Should You Invest in Ethereum Right Now?

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, the world’s second-largest cryptocurrency, soars above $4,000 for the first time

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LONDON — Ether surged past $4,000 Monday to hit a new record high, extending a stunning rally for the world’s second-largest cryptocurrency. Ether, the digital token of the Ethereum blockchain, rose to an all-time high of $4,196.63 at 12:15 p.m. ET, according to Coin Metrics. It now has a total market value of $483.4 billion, less than half bitcoin’s $1.09 trillion. As of around 12:30 p.m. ET, ether was up 8.1% at a price of $4,187.32. Bitcoin, on the other hand, inched up 1.1% to $57,962.18. Once in bitcoin’s shadow, ether has seen parabolic gains recently as investors look to other cryptocurrencies for returns. Bitcoin fell over 2% in April, while ether rose more than 40%. The entire crypto market is currently worth around $2.5 trillion, according to CoinMarketCap, on the back of growing interest in the space.

Mainstream investors and some corporate buyers like Tesla flocked to bitcoin earlier this year, viewing the digital coin as a potential inflation hedge as central banks around the globe print money to relieve coronavirus-battered economies. Major Wall Street banks like Goldman Sachs and Morgan Stanley have also sought to provide their wealthy clients with bitcoin exposure. However, some investors still aren’t buying the crypto craze. Michael Hartnett, chief investment strategist at Bank of America Securities, said bitcoin’s rally looks like the “mother of all bubbles,” while Alvine Capital’s Stephen Isaacs said there are “no fundamentals with this product, period.”

Ethereum vs. bitcoin

Founded in 2013 by Vitalik Buterin and a host of other software developers, the Ethereum network lets people build applications on top of it. Ether is the network’s native currency. Bitcoin and ether are similar in that they are both digital currencies. But they have their differences. Whereas bitcoin is viewed by its proponents as a store of value akin to gold, Ethereum aims to be the infrastructure for a kind of decentralized internet that isn’t maintained by any central authorities.

Ethereum Reaches $500 Billion Market Cap

Ethereum, the world’s second-most valuable digital currency, spiked nearly 10% in the last 24 hours and reached an all-time high of approximately $4,350.

According to the latest data published by Coinmarketcap, Ethereum now has a market cap of more than $500 billion. ETH becomes only the second cryptocurrency in the world to reach a market value of $500 billion.

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Ethereum is now more valuable than the world’s leading investment bank JPMorgan. The total market cap of JPMorgan Chase currently stands at around $480 billion. ETH has been on the rise since the start of 2021. The cryptocurrency crossed the market cap of the Bank of America and PayPal earlier this year.

ETH whale activity has increased during the last few weeks amid a surge in its price. Yesterday, Finance Magnates reported about the movement of 46,793 Ethereum from a digital wallet to cryptocurrency exchange Binance.

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“Ethereum top stakeholders have been historically active over the past week, with one 4-hour window on 5 May seeing over 6,300 $100k+ ETH transactions. This explosion in activity beginning on 3 May had much to do with the inevitable rise to $4,200,” on-chain analytics firm Santiment mentioned on Twitter.

The latest price surge in ETH has made Vitalik Buterin, Co-Founder of Ethereum, one of the youngest crypto billionaires after his public Ethereum address crossed 333,520 ETH, which is approximately $1.4 billion in value.

Ethereum Whales and Institutional Inflows

According to the latest data published by Whale Alert, a blockchain tracking and analytics platform, ETH’s record price has accelerated unknown Ethereum whale transactions. A crypto whale transferred 137,832 ETH to an unknown wallet on 11 May at 19:38 UTC. The total value of the transaction stands at around $560 million. The latest weekly cryptocurrency fund inflows report from CoinShares highlighted a significant jump in Ethereum-related institutional inflows. ETH investment products saw inflows of $60 million last week, which is up by 100% compared to the last week of April 2021.

The market dominance of ETH currently stands at around 19.6%, which is its highest level on record.