Can Ethereum Be a Profitable Long-Term Investment?

Can Ethereum Be a Profitable Long-Term Investment

It’s no secret that the cryptocurrency market hasn’t been in the best spot for a long time now and that despite the high rewards gained by investors who were quick on the uptake to leverage bargain prices before they exploded, there’s a justifiable sense of reluctance towards the industry nowadays. Investors are generally split between two camps, encompassing those who swear by a bull run after the depressing period cryptocurrencies have traversed and those who don’t see the light at the end of the tunnel. However, it’s safe to say that several crypto giants have behaved exceptionally well, with Ethereum serving as a main example.

Ethereum, the largest altcoin ever and the only real threat to Bitcoin’s supremacy, proudly tells one of the most successful stories in the crypto sphere. Ethereum laid the foundation for some of the best-developed and most-used blockchain applications, with numerous examples built on top of it. Ethereum has unblocked the untapped potential of Bitcoin and sees many crypto projects using it, which is a reason why it can’t be dethroned, and experts believe in it. But the crypto market is currently swimming in hazy waters, so what are the chances that Ethereum can take you further compared to other investment projects? Is now the time to learn how to buy crypto currency, and why should you trust your money to the second-best one, ETH?

Ethereum in plain light

Ethereum and ETH are often interchangeably used despite sharing the same significance, which is why the first step to unearthing it is to understand the definitions of both. Ethereum is a blockchain-based platform with numerous, more complex features than any of its counterparts. (Ether) ETH is Ethereum’s native cryptocurrency, serving as the fuel that powers the platform. You’ll typically encounter it traded under this symbol on various cryptocurrency platforms, so when you hear someone ordering or investing in Ethereum, they’re purchasing Ether. The token is decentralized, and no central bank, government, or any other authority has power over it, as opposed to fiat money. Similarly, it takes seconds for an investor to come into Ether’s possession, as opposed to traditional money, which can take days to transfer.   

Ethereum hasn’t been created to serve as a mere digital currency, but also to facilitate the storage and transaction of other digital assets and building decentralized applications. Other crypto projects, such as Tether, one of the most popular stablecoins, are developed on Ethereum.

Simply put, Ethereum is behind numerous applications like DAOs, NFTs, and dApps. The latter represents applications operated on decentralized P2P networks while opposing apps run on centralized servers such as Uber.  

Smart contracts as a component that secures Ethereum’s top position among competitors

The main difference between Ethereum and the cohort of smaller or larger crypto projects is that smart contracts are only possible thanks to the former’s technology. Smart contracts, self-executing contracts using a pre-established agreement, have revolutionized many industries through an innovative way of conducting transactions. Through them, no other third party, such as banks, is involved in a transaction’s conduction besides the interested parties. Besides these Ethereum-based programs that automate the execution of agreements to deliver a faster and more secure outcome for the participants, it is also the backbone of non-fungible tokens (NFTs) and decentralized finance (DeFi). This versatility has fueled its well-rooted, leading position on the market and pushed it to the level where it conquers the reigning cryptocurrency, Bitcoin.

How have successful investors weathered past storms?

If anything can scare investors off the crypto market, it is the thought of a potential bear market or a period in which cryptocurrencies lose 20% or more of their value and their prices continue to fall. Bear runs are nothing new in the financial sphere since dynamics are influenced by a lot of factors, such as the global economy, political shifts, geopolitical conflicts, and so on. And on the background of the current sluggish economy, geopolitical crises, lingering pandemic effects, rising inflation rates, and other barriers to a thriving economy, it’s not surprising that the crypto market has been dragged down with other industries.

However, savvy investors know that there’s always a bear market at the end of a prolonged period of price declines. During these challenging times that can push even the most confident crypto owners to get rid of their assets and welcome less volatile ones in their portfolios, it can be tempting to clear them out. But one thing must always be kept in mind, and that is the tendency of cryptocurrencies to bounce back together with a reviving economy. Bitcoin is the reference point that tells when the market is going in the right direction and sets the tone for investors. When it starts seeing more demand than supply, Ethereum and other cryptocurrencies witness price improvements, too. At the moment, the general opinion is that crypto will recover the following year, so stick to your investment strategies and remember that Ethereum is an asset that, at the moment, is largely and better approached through long-term lenses.

Experts are placing large bets on ETH, but why?

Speculations are that Ethereum will witness a revival sooner or later, with the majority of believers betting on the end of this year. Ether futures ETFs, a more straightforward way to gain exposure to the asset, have created a lot of fuss in the crypto market, especially after the SEC attested to consider approving their launch at the beginning of the month. 

There remains a lot of speculation about how the world’s largest altcoin will fluctuate in the future and with the increased familiarity with the concept. For security reasons, it is essential to use common sense when approaching this and any other crypto asset, holding a long-term strategy and avoiding trying to “time” the market.

Closing thoughts 

Ethereum has established itself as the second most prominent cryptocurrency in this highly diverse and competitive market, succeeding in weathering any storm it has witnessed. Its practical use cases, well-implemented position, and long-standing popularity back up the general perception that it’s the project with the highest likelihood of thriving in the future. However, before you decide to jump on the bandwagon, conduct thorough research and ensure you’re not overinvesting if you’re not comfortable with losing significant amounts of money and waiting again for the market to bounce back later.

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