By Terry Ashton, updated December 11, 2024
Ethereum has always been second to Bitcoin despite offering so much more in terms of crypto tools and knowledge. While the creator of Bitcoin is an anonymous person or team, we all know who Vitalik Buterin is and what his purpose is regarding Ethereum’s improvement.
There’s less mystery surrounding Ethereum, especially since Buterin developed a roadmap that will change it forever. Ten years from now, users won’t experience the same scalability challenges when the network gets congested or worry about sustainability matters when Ethereum becomes the greenest crypto on the market.
But as with every cryptocurrency, the ETH price changes based on factors like investor sentiment or supply and demand, so users need to analyze the market continuously to assess their next move. Now, Ethereum is rising due to ETFs’ possible approval, but does that mean investors must hurry to get it?
What’s the deal with ETH ETFs?
ETFs have been one of the most demanded and appreciated digital assets of 2023, driving adoption and acceptance pretty quickly since their popularity rose on the market. Although it took some time for regulators to approve of BTC ETFs, investors were more than eager to pump prices up and make these tools one of the most valuable on the market.
ETFs can also be based on Ethereum, the blockchain that could innovate the sector like no other. However, governments are still skeptical about Ethereum’s safety and reliability. Therefore, ETH ETFs have yet to become legal and approved by the SEC, but investors feel like the possibility is high, so Ethereum has been on a rising path recently.
Authorizing Ethereum ETFs would be a significant improvement for the crypto market because it could break the barriers of the governments’ limitations. At the same time, institutions might work harder to provide regulation and a proper framework for investors.
But does that mean you should acquire Ether?
Usually, people buy low and sell high, a technique that works sometimes but not always. You should be a professional investor to buy Ethereum when the prices are dropping and wait for the best time to sell them at enormous prices.
Rising crypto prices show that the overall investor sentiment is positive. At this moment, it may be best to add coins to your portfolio because they’ll accumulate value over time, especially at such considerable prices.
However, buying in this period may also be risky because, due to the market’s instability, you never know when Ethereum will flop and leave you with no profit or income from crypto. If the SEC doesn’t approve of ETH ETFs, their prices might drop dramatically, especially when no further action is taken.
Why being a long-term investor benefits you in these situations
While anyone can benefit from gaining significant crypto value in such periods, long-term investors are significantly advantaged if they’ve been investing for a few years. All the value gathering in the portfolio can double when prices are soaring, technology is developing, and investors are optimistic.
Therefore, regardless of the coin you invest in, be it Bitcoin or Ethereum, it’s best to approach it with a long-term strategy, whether it’s dollar-cost averaging or diversifying. The DCA method implies you invest a specific amount of money in crypto over a more extended period of time, which will lower your risk of being hit by massive price movements.
On the other hand, diversifying cryptocurrencies means investing in an array of different coins. Adding more eggs in the basket can be done based on asset class or use cases, but you should also change the strategy wherever a part of your portfolio becomes less efficient.
Is Ethereum a better investment than Bitcoin?
Many consider Bitcoin to be top-tier because it was the first cryptocurrency created and proved to investors throughout the world that it can withstand any challenge linked with economic and financial real-world events.
Indeed, Bitcoin is an excellent store of value, and its market capitalization has been impressively evolving over the past few years. However, Ethereum offers numerous ways for diversification since its most important features, such as smart contracts, DAOs and dApps have their specific tokens that can bring something new to your portfolio.
Utility tokens, stablecoins, asset tokens, and NFTs are all accessible on the market and are subject to technological improvements and trends. Therefore, there’s always something new happening with Ethereum that contributes to its value.
What should you be wary of before investing in Ethereum?
You may have guessed why Vitalik Buterin created the development road that will most likely expand on about ten years before completion. Ethereum has several vulnerabilities and issues that developers are trying to deal with, but the main problem started from the platform’s scalability problems.
The network would get so congested at times that a transaction would take one week to be verified by a node or validator, and the frass fee would be enormous. This would also bring security concerns because congestion would allow attackers to exploit vulnerabilities better, whether through phishing scams or attempting to influence the blockchain.
Following these issues, Ethereum was threatened by “killers” or competitors that provide the same products and services as Ethereum but at lower costs and faster speeds. Cardano, Solana and Avalanche are only a few examples of the numerous Ethereum competitors.
Finally, the lack of regulations is posing serious troubles for Ethereum, because the lack of laws exposes users to several risks. At the same time, the continuous skepticism over Ethereum hinders its adoption rate, which is needed to mitigate safety and fairness in creating a legal framework for cryptocurrencies.
What do you think about Ethereum?
Ethereum is one of the most unique and innovative cryptocurrencies in the world. It gives users access to a massive ecosystem consisting of NFTs, DAOs, dApps, and other similar assets and programs. The technology behind Ethereum has made real-world business leaders approach it to improve data, save costs, and enhance their worldwide expansion. Still, cryptocurrency can also offer numerous opportunities for regular users.