After a long crypto winter in 2022, investors who stuck it out have been rewarded with substantial gains this year. Ethereum (ETH 0.09%) has seen a 52% increase, while Bitcoin (BTC 0.97%) has soared by 74%. Even smaller cryptocurrencies such as Solana (SOL 1.20%) have seen an impressive 141% increase. It is essential to choose the right investments, though, as more volatility could be on the horizon.
For August, I’m investing in Ethereum. It has been and continues to be a leader in the industry, with a market cap just under 20%. Ethereum’s smart contract platform provides a wide range of uses, from non-fungible token (NFT) marketplaces to decentralized finance (DeFi) applications to metaverse projects. This gives it more utility than its largest competitor Bitcoin, which is mainly used as a payment coin or hedge against inflation.
In late 2020, Ethereum developers successfully finalized The Merge, transforming the network into a proof-of-stake blockchain and reducing its energy output by about 99%. This was the biggest update to Ethereum so far, but more are on the roadmap, such as The Surge, which should improve the blockchain’s speed and reduce transaction fees.
It is clear that Ethereum has strong long-term potential, however, it is important to remember that cryptocurrency is still speculative and there are risks to consider. Developers are creating new blockchains by the day, and if Ethereum fails to keep up with demand, it could lose market share. Additionally, crypto investments are always risky, as Ethereum’s utility is largely based on speculation.
When investing in any cryptocurrency, there is always a risk that it may not pan out. But if you are willing to take that risk, Ethereum could be a great investment with plenty of potential.
