Ethereum
4 reasons to buy Ethereum when it costs less than $4,000
Ethereum could surpass Bitcoin in the second half of 2024. Here’s why.
During the first six months of the year, Ethereum (ETH 1.19%) largely kept pace Bitcoin (Bitcoin 0.39%). Both are now up about 45% year to date, and the big question many investors are asking is which one will outperform through the rest of 2024.
In early May, the simple answer would have been Bitcoin. But Bitcoin has stumbled lately, which has opened the door to EthereumThere are now four compelling reasons why Ethereum could surge even if Bitcoin continues to move sideways.
The new ETFs
Bitcoin, of course, has had spot exchange traded funds (ETF) since January. And the introduction of this new investment product has arguably been one of the most important crypto narratives of 2024. But there’s a new twist to that narrative. In late May, the Securities and Exchange Commission (SEC) finally approved new spot ETFs for Ethereum.
Image source: Getty Images.
It is not yet clear to what extent these new ETFs will stimulate the market. They are currently believed to begin trading this summer and could generate an influx of $3 billion into the new ETFs. However, this is an optimistic scenario. JPMorgan Chase (JPM 0.88%), the bearish scenario is closer to $1 billion. That’s barely a blip compared to the $30 billion that has flowed into the new Bitcoin ETFs. Nonetheless, they’re still likely to move the needle for Ethereum.
Ethereum, market leader
Ethereum continues to be the undisputed market leader in every major blockchain sector. Take Decentralized finance (DeFi), for example, where Ethereum still accounts for over 60% of all total value locked (TVL) in the blockchain world. No other blockchain comes close. So we can start to downplay any idea that a challenger like Solana (GROUND 5.24%), Cardano (ADA 1.64%), or avalanche (AVAX 5.84%) has a clear path to overthrowing Ethereum in the near future.
The market seems to agree. Ethereum significantly outperforms all its peers. For example, Solana is up 35%, and Sui (I HAVE -1.69%) is up 9%. Other leading competitors are in shock. Aptos (APT 2.66%) is down 28%, Cardano is down 32%, and Avalanche is down 33%.
Regulatory clarity
There’s another big reason to cheer for Ethereum: regulatory clarity. Almost everyone who’s ever heard of Ethereum considers it a cryptocurrency. However, for the first six months of the year, there were rumors and whispers of an ongoing SEC investigation into Ethereum, due to uncertainty over whether it was actually a security.
But these rumors now appear to be quelled, with the SEC announcing that it is ending all investigations into Ethereum. This is important because it could open the money spigots for risk-averse institutional investors. Crypto is risky enough without the added risk of an SEC investigation.
Long-term disruptive potential
Finally, there’s Ethereum’s long-term disruptive potential. Over the past decade, Ethereum has been a true innovator, pioneering niches of the blockchain world that never existed before. And judging by all the technological upgrades made to the Ethereum blockchain over the past two years, that trajectory is likely to continue.
In fact, investment firm VanEck expects Ethereum to see dramatic growth in several key areas, led by DeFi. This is where the Ethereum blockchain can offer the greatest disruptive potential. It is simply faster, cheaper and more transparent to manage financial assets on a blockchain. And this could allow Ethereum to gain market share at the expense of its traditional financial competitors.
In fact, VanEck did some math and determined that Ethereum could reach a value of $22,000 per token by 2030. That would give Ethereum an implied market cap of over $2 trillion. Given that the largest Silicon Valley companies are currently worth between $1 trillion and $3 trillion, a $2 trillion market cap for Ethereum isn’t as unreasonable as it might seem at first glance.
What to look for in the next six months
From my perspective, the biggest threat to Ethereum remains the rise of blockchain challengers such as Solana. THE economic gap that once surrounded Ethereum seems to be getting smaller and smaller with each passing year.
That said, Ethereum is shaping up to be one of the best crypto investments you can make in the second half of 2024. If the new ETFs perform as expected, then it could enter the race to be the second most valuable cryptocurrency in the world. .
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Dominique Basulto has positions in Bitcoin, Cardano, Ethereum, SUI, and Solana. The Motley Fool holds positions in and recommends Aptos, Avalanche, Bitcoin, Cardano, Ethereum, JPMorgan Chase, SUI, and Solana. The Motley Fool has a disclosure policy.