When it comes to investing, time and timing are crucial, regardless of the assets you want to add to your portfolio.
But deciding on the best moment to invest and how long to hold on to that investment is especially important when you’re dealing with a highly volatile asset class like crypto. Nothing proves this point better than Bitcoin’s tumultuous price history.
Those who were lucky or clever enough to invest in the coin when the price was up managed to make generous returns, while those who bought the coin right before a bear run suffered considerable losses.
Unfortunately, the unpredictable nature of digital currencies makes it almost impossible to tell when prices might rise or fall, and that applies to all cryptos, not just Bitcoin.
Ethereum, the second-largest crypto in the market is just as erratic as its older contender when it comes to price movements.
Checking out price charts will help you get a sense of the project’s past and present performance, but since values change constantly, this information won’t serve as a predictor for future price evolution.
So, how can one figure out if it’s a good time to invest in Ethereum or not? The best way to approach this issue is by doing a more in-depth analysis of the project, taking into account both the pros and the cons, to help you gain a better understanding of its potential and the risks you expose yourself to.
So, without further ado, let’s take a look at both sides of the coin (pun intended) and see where this leads us to.
A Bit Of Context
2022 was quite a disastrous year for digital currencies, and no coin was spared.
After what seemed like a stellar beginning, with crypto prices reaching new all-time highs, the bubble burst midway through 2022, as prices started to decline amidst a series of disturbing events that took the crypto sphere by surprise.
First, there was the crash of stablecoins Terra and Luna, followed by several bankruptcies and the disastrous collapse of FTX, one of the largest cryptocurrency exchanges at the time, which is said to have affected nearly 1 million investors.
FTX founder Sam Bankman-Fried was then arrested and indicated with several criminal charges, including conspiracy to operate an unlicensed money transmitting business, conspiracy to commit bank fraud, securities fraud, and fraud in connection with the purpose or sale of a derivative.
All in all, digital currencies have seen better days. After all these scandals and incidents, it was pretty obvious that another crypto winter was about to take over. And so it happened.
Crypto values continued to plummet across the board, many investors sold their digital assets in a desperate attempt to minimize losses as much as possible, and the entire market shrank considerably.
The fact that this is not the first winter season to hit the crypto landscape did little to calm down the spirits. Even if the industry has gone through several bear markets before, this one was a lot more intense since crypto fell from a greater height this time around, having been closer than ever to mainstream acceptance.
Ethereum Between Pros And Cons
As you can tell, this is not a particularly happy moment for crypto traders and investors.
There’s a lot of doubt and uncertainty in the market, and everyone is searching for answers and clues that can point them in the right direction.
So, why hasn’t everyone abandoned ship, and most importantly, is Ethereum still considered a viable investment option?
Although Ethereum is still far away from its peak values, the first months of the year brought a slight improvement price-wise. This upward trend provided a glimmer of hope after a long period of relentless decline.
It’s difficult to say whether this trend will last or not or if Ethereum will ever go back to its previous highs since analysts have been delivering quite different forecasts.
But given its current value, now might be a good time to jump at the opportunity to purchase Ethereum at a very affordable price.
Even if this won’t bring you massive returns at the moment, chances are that the asset will appreciate at one point in the future, and when that happens, it could translate into considerable earnings.
Also, let’s not forget that Ethereum completed a very important update last year, also known as the Merge, which saw the project transition from a proof-of-work consensus mechanism to a proof-of-stake system.
In doing so, Ethereum managed to address one of its biggest concerns – energy consumption, which was cut back by up to 99% after the Merge.
Then there’s the Shanghai update, scheduled to take place on April 12, which is going to enable staked ETH withdrawals.
But probably the strongest argument in favor of adding Ethereum to your investment portfolio is its ever-expanding applicability.
Unlike other cryptos, Ethereum is a blockchain-based platform that can be used for DeFi, NFTs, transactions, data storage, ICOs and more, and that makes Ethereum a lot more valuable, resilient and promising than many other projects.
Does that mean Ethereum is a surefire investment? Far from it. There are still plenty of issues to consider, such as the slow speed and high costs of Ethereum transactions, which will probably make the target of future updates to the platform.
And most importantly, despite its strong suits and huge potential, one can’t disregard the fact that Ethereum is part of an industry that’s still in its infancy, and much like all the other crypto projects, it’s bound to suffer from massive price swings as the market matures. All crypto investments are inherently risky and Ethereum makes no exception.
So, before you decide if you should take the leap or not, make sure you do your own research, analyze all these aspects thoroughly and determine your risk tolerance. Caution is always the best policy when investing in crypto.