Is Ethereum A Good Investment In 2021? Find out

Investors have flocked to Ethereum, is it a buy?

9 Min Read
Last Updated July 23rd 2021

Crypto experts believe that ETH is a good investment this year compared to other digital assets. Crypto analysts believe that the price of Ethereum will grow further in 2021 and reaches new heights.

Ethereum is a community-centric cryptocurrency that was first proposed in 2013. Development of the coin was crowdfunded over the course of 18 months, with the network first going live in July 2015. At launch, some 72 million coins were pre-mined on the Turing-complete system, which is capable of executing scripts and running completely decentralised applications.

While ETH might have got off to a slow start, over the course of the past six years it has steadily established itself as the second-largest cryptocurrency behind Bitcoin. Market capitalisation for the coin has exceeded $31 billion and it currently stands on the cusp of powering the new deregulated finance revolution.

Ethereum has already begun to infiltrate a variety of major industries, which in turn has meant that the interests of many traditional investors have been piqued over the past twelve months or so. Speculators now believe that ETH is gaining the traction required to become a contender for the number one crypto investment in 2021.

Will Ethereum’s price go up this year?

The entire planet is now a year into the coronavirus pandemic. The economic volatility COVID-19 has caused around the globe has impacted upon crypto in general, elevating its status throughout the world. As such, many people are now wondering how to invest in ETH, and whether Ethereum is worth investing in.

According to experts, the price of ETH could increase to a new high level of $3,500 by the end of 2021. The knock-on effect has been that interest in Ethereum is at an all-time high, with investors seeking to learn how to trade Ethereum. The proof is in the fact that the number of active ETH wallets has increased by 50% in the space of just one year.

According to its projection, Ethereum can hit $3,500 per coin, sending its market capitalization above the $500 billion mark before 2021 ends. 

Wait: didn’t Ethereum use drop recently?

While it’s true that active wallets dipped to a two-month low towards the end of 2020, this can be explained by:

Early investors cashing out.

Post-lockdown investors returning to full-time work.

Holiday season cashouts.

Despite this lull, experts remain unfazed, as the medium-term fundamentals of ETH remain in solid condition. Bulls will still currently answer the question “is Ethereum a good investment?” with a resounding “yes”.

Shifting models

Current Ethereum investment news seems to point towards the idea that Ethereum 2.0 is all but upon us. This involves a shift in the premise of the currency to a stake model as opposed to a proof-of-concept model, impacting upon the usability and price of Ethereum as the speed and quantity of transactions improve.

As the DeFi (deregulated finance) revolution unfolds, the number of Ethereum transactions is set to increase exponentially. From outside appearances, the DeFi world might seem quite dull (think logistics and inventory management), but a shift towards liquidity in industry models means that the capital used in DeFi transactions can be loaned out as credit. This means owners of ETH will receive totally risk-free interest returns on any capital being used in such systems.

Ethereum and the Fourth Industrial Revolution

As the world prepares to shift to an automation-reliant model in the post-pandemic era, it is clear that blockchain technology is going to play an important role in Industry 4.0. The applications of Ethereum have already established it as an important part of this seismic shift in how logistics will function under new technological platforms.

Entire business models are being overhauled and designed based on the interconnected and secure services Ethereum can provide. As Industry 4.0 gets underway, we can expect to see a vast uptake in the deployment of Ethereum solutions at scale in three theoretical waves: awareness, experimentation, and transformation.

At present, we are witnessing the shift from awareness of the applications of Ethereum to experimentation (proof of concepts within specific digital industry scenarios such as logistics). As the experimentation phase continues, the wider potential of Ethereum will be realised, and its widespread implementation will take place - at which point, its price is likely to go through the roof.

Towards the end of the 2010s, the world began to understand that Bitcoin held an intrinsic value as a deregulated currency - a sort of digital gold, if you will. In the next couple of years, the world will begin to understand Ethereum in a similar fashion - as a “digital oil”, or a substrate which is malleable and useful for an almost limitless variety of applications within the digital industries. As Web 3.0 and the Internet of Things pick up the pace, the practical applications of ETH as a catalyst for creating an intelligent, connected online space will become more clearly visible.

As such, many speculators consider right now to be something of a “golden age” for ETH investment. This is because it remains affordable for casual investors, just before an anticipated leap into the financial stratosphere. Ultimately, there’s no time like the present for those who want to make the most out of ETH investments.

What about Ethereum price movements?

The volatility of Ethereum price movements are sometimes enough to put cautious investors off. While traditional consensus tells us that volatility equals instability, it’s worth remembering that ETH is far from a traditional investment. When considering whether to invest in Ethereum, or crypto in general, volatility should not be the only factor to consider.

While it is true that there have been some sharp contractions in ETH value recently, potential investors should take a look at Ethereum’s annual lows to gain an insight into whether investment makes sense or not.

Volatility and significant drops in value have been a regular occurrence. Despite this, the year-on-year price of ETH continues to climb steadily. Like all markets, the crypto market took an initial hit back in March 2020, as the world prepared to lockdown, sitting at just over $110.

However, six months later ETH was pushing towards a resistance level of $400, before finally pushing through in mid-August of the same year. There might have been some characteristic drops along the way, but for the most part, the naysayers have been silenced.

Fast-forward to February of 2021, and any negativity or hostility has been completely blown out of the water. Ethereum currently sits at just below $1,900, with speculators expecting it to reach $2,500 in a matter of months. Yes, you can expect dips - but hold out for those highs and expect to be rewarded handsomely.

Don't Miss: Ethereum Price Prediction

So, is Ethereum a good investment right now?

Arguably the only thing standing in the way of Ethereum becoming the world’s premiere crypto is the amount of success it is experiencing at present. While that might sound like a paradox, allow us to explain:

As adoption rates leap and prices and transaction fees increase, Ethereum’s competitors are forced to react and capture the market share being squeezed from ETH as a result of these increases. At present, none of these competitors has managed to gain any real traction. However, should ETH experience any setbacks while scaling up, alternatives will be ready and waiting for adoption.

For those who can overlook the current market volatility, the medium and long-term increase in the value of Ethereum simply cannot be ignored. DeFi represents huge upward potential for Ethereum, with notable uptake in recent months from some of the world’s largest multinational corporations, including Coca-Cola and Visa.

At present, the sum total local in DeFi transactions hovers closely towards $5 billion USD, which is approximately 4% of the total value of ETH. The continued interest shown by large corporations suggests that this amount is likely to skyrocket over the next year.

It’s also worth noting that ETH recently passed the $1 trillion milestone in total transactions. As the volume of transactions increases, so too does wider acceptance of ETH as a legitimate investment - and if Bitcoin taught us anything, legitimacy is great news for any cryptocurrency.

As of now, crypto by its very nature remains a risky investment - but for those who can ride the waves of risk and volatility, the rewards to be gleaned from Ethereum investment are huge.

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