Why Ethereum Might Be A Good Investment In 2022?

With Web 3.0 on an exponential growth trajectory, the second-largest cryptocurrency is on the watch list of many investors as the next big thing of 2022. 

Last Updated February 9th 2022
8 Min Read

Ethereum is a multi-purpose cryptocurrency that can be used in various ways, including storing value or executing smart contracts. It has the second largest market capitalization behind Bitcoin, with $368.5 billion at press. Ethereum's highly decentralized network could transform entire industries such as education and eCommerce by making them more efficient and disrupting some like the finance industry. 

While it is still far off from flippening Bitcoin, Ethereum is undoubtedly on a growth trajectory. Its trading volumes at any one time now rival those of Ethereum. This means not only is its adoption growing, but its popularity as an investment is growing as well. If it continues on its current trajectory, new investors getting into crypto might start looking to Ethereum first, unlike when Bitcoin was the first cryptocurrency that new investors interacted with before learning more about the market. 

Ethereum's growing popularity has a lot to do with investors who believe that it is the future of the internet. This has seen a trend where even hardcore Bitcoin maximalists increasingly convert some of their Bitcoin stashes into Ethereum. Ethereum is also being used to unlock smart contracts on the Bitcoin blockchain. For instance, through Wrapped Bitcoin (wBTC), it is possible to use Bitcoin in DeFi applications. 

The fact that Ethereum can help unlock value out of its competitor Bitcoin means that Ethereum is the king of DeFi and all other decentralized applications. This makes Ethereum a good investment in 2022, given that Dapps are disrupting the web as we know it today. 

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Will Ethereum Go Up In 2022?

Ethereum may have started 2022 with a slight correction, but it is still strongly bullish when you zoom out the charts. Just 15 months ago, Ethereum was trading at $600. By November last year, Ethereum was trading at $4800. Even at the lowest point of its recent correction at $2400, Ethereum was still much higher than its late 2020 prices. 

Ethereum's current price, still way off its all-time highs of $4800, is due to recent fears of a rate hike in the US This saw all cryptocurrencies take a hit as investors fled from risky assets. 

However, Ethereum and the cryptocurrency market as a whole has bounced back, an indicator that the rates hike fears have been priced into the market. Besides increased positive momentum in the broader market, several other factors indicate that Ethereum could go up in 2022. 

Below are some of the factors that could trigger an Ethereum price increase in 2022:

  • Web 3.0 Innovations on the Ethereum Blockchain
  • Successful transition to Ethereum 2.0

There is an explosion of Web 3.0 Dapps on Ethereum

The future of the internet is taking shape, and it's decentralized. Ethereum is taking over Web 3.0 with its cutting-edge technology. Today, almost all Web 3.0 activities are happening within the Ethereum ecosystem. One area where Ethereum has recorded exponential growth is in Decentralized Finance. Currently, there is $86.95 billion locked up in DeFi, and $25.7 billion of that amount is Ethereum. 

Despite the volatility that has characterized the cryptocurrency market over the last few months, DeFi projects continue to come up, offering all forms of sophisticated financial applications. This has helped increase Ethereum's intrinsic value and made it one of the cryptocurrencies most likely to survive under all kinds of market conditions. 

With DeFi so important to Ethereum's growth, it is only natural to wonder what Decentralized Finance is, and how does it work?

Decentralized finance is the new way to make transactions more secure and efficient. By eliminating intermediaries, this innovative concept improves financial access, especially for people in developing countries who don't have access to legacy banking systems. 

With a distributed database, you can trade and lend from anywhere. All you need is an internet connection. The software that records your financial actions in this system ensures the accuracy of all transactions by using blockchain technology to verify and ensure data integrity without a central entity. In this verification and data integrity, Ethereum has come to dominate the market. Some of the DeFi projects that are now built on Ethereum include Compound and Yearn Finance, two of the largest players in the DeFi space. 

Besides DeFi, Ethereum has experienced widespread adoption in the Non-Fungible Tokens (NFTs) market. Non-fungible tokens are a new type of crypto that differs from other cryptocurrencies in that they can't be traded for a similar token 1:1. Cryptographic assets with unique identifiers ensure that tokens are not interchangeable. 

Over the past year, there has been an explosion of NFT use cases, especially in play-to-earn gaming. Ethereum leads on this front, with top NFT platforms like Decentraland and Sandbox being Ethereum-based. 

These point to Ethereum's strong and growing use cases, making ETH a great cryptocurrency to buy in 2022. 

The transition to Ethereum 2.0 is almost complete

Ethereum 2.0 aims to completely eliminate the problems of scalability and high fees that have dogged Ethereum for years. The transition to Ethereum 2.0 started in 2020 and aims to make Ethereum faster by relying less on the mainnet and more on layer-2 solutions to complete transactions. It is expected that Ethereum 2.0 will handle up to 100k transactions per second, much higher than the roughly 30 TPS that Ethereum 1.0 can handle. 

Even as it transitions to Ethereum 2.0, which relies on a Proof-of-Stake algorithm, Ethereum remains one of the most secure blockchains in the market. Most Proof-of-Stake networks are insecure because they only have a few validator nodes. Ethereum does not have this problem as it has one of the most distributed networks of validators. Currently, there are 222,052 Ethereum validators distributed globally. 

Considering that Ethereum 2.0 also comes with a deflationary element, it could help push up the price as usage grows. Essentially, Ethereum 2.0 is not just a reason to buy Ethereum in 2022 but for many years to come. 

Check Out: 26 Reasons Why You Should Invest in Ethereum Today

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Is Investing In Ethereum A Good Idea? 

Overall, Ethereum seems like a pretty strong investment in general as it combines good growth, excellent fundamentals, strong adoptions, and industry tailwinds, while its market position is strong as well.

Save for a dip that started in early 2022, Ethereum has been in a bull rally for over a year. Since bear markets don't last forever, Ethereum will likely gain value in 2022. 

Besides the speculative aspect, Ethereum adoption is on a growth trajectory. Since the prices of coins and most other assets rely on the growing demand for the underlying asset, Ethereum adoption in DeFi and other markets is a positive indicator for ETH. 

Analysts are pretty bullish on Ethereum, too. They are betting on Ethereum's position as the second-largest cryptocurrency by market capitalization and its growing adoption in Web 3.0 applications. Since analysts influence the cryptocurrency market as opinion shapers, their nod is a positive signal for Ethereum. 

The main reason likely to drive Ethereum adoption is its increased adoption in web 3.0, which is drawing some of the best developers globally.

Ethereum is also likely to benefit from its shift to Ethereum 2.0, which has introduced staking and makes Ethereum more usable for Dapps development. 

An example of Ethereum's usage in Web 3.0 is Compound. Compound is an ERC-20 token that empowers community governance of the Compounds protocol. The Compound protocol enables users to borrow and lend COMP and other cryptocurrencies without an intermediary. The Ethereum blockchain secures all this. At the moment, $7.47 billion worth of ETH is locked up in Compound. 

This is a big deal as it is a positive indicator of the growing demand for Ethereum in the fast-expanding DeFi market. It is a confidence boost for anyone is thinking of investing in Ethereum in 2022 and for years to come. 

Ethereum Crypto Forecast In 2022

Ethereum is likely to get more spotlight than Bitcoin in 2022. This is due to the ongoing transition to Ethereum 2.0, which is expected to be completed mid this year. The excitement is well-founded, considering that this shift makes Ethereum more usable by increasing speeds and cutting transaction costs. Ethereum 2.0 also makes Ethereum deflationary, and going by the laws of demand and supply; it is a signal that Ethereum could go up this year. 

According to analysts at Coinpedia, if everything goes well with Ethereum 2.0, Ethereum could test $13,000 in the course of 2022. 

Don't Miss: Ethereum (ETH) Price Prediction

How To Buy Ethereum

Of all the cryptocurrency exchanges that have sprung up over the years, eToro stands out among the best for buying crypto. eToro ranks highly among the top exchanges where you can buy Ethereum for its ease of use, and low costs. 

Using eToro is pretty easy, too. All you need to do is get your details in order, then follow the instructions on the SIGNUP page. 

Once you have signed up, eToro will do an ACCOUNT VERIFICATION on you. 

This is purely for security reasons, and it is pretty easy to do. As part of the verification process, you will be required to upload your identification docs such as your driver's license, an ID, or a passport. You will also be required to upload a Proof-of-Identity such as credit cards or utility bills. 

After your account is verified, you can DEPOSIT FIAT CURRENCY into your account. There are multiple options ranging from USD, EURO, and GBP that you need to buy Ethereum. 

Once fiat is deposited, go ahead and MAKE YOUR FIRST ETHEREUM PURCHASE. Just click on Ethereum on the eToro website, and follow the purchase instructions.

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Conclusion

To sum it all up, investors can get a dominant crypto asset, growing in adoptions, addressing a $380 billion market. So, yes, Ethereum is a crypto to buy for 2022. 

Ethereum is growing in popularity as the platform blockchain that will anchor Web 3.0 applications. So far, its use case in DeFi has shot up, especially through top projects like Compound (COMP) and Yearn Finance (YFI). Ethereum is also growing in dominance in the NFTs market, and Ethereum-based projects like Sandbox (SAND) and Decentraland (LAND) already lead the way in the NFTs market. Add to that the fact that Ethereum 2.0 is almost done, and it is not hard to see why Ethereum is predicted to record exponential growth in 2022. 

eToro – The Best Platform To Buy Ethereum 

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