on the crypto
After a disastrous 2022, this year is starting on a more positive note for the cryptocurrency market. Many cryptocurrencies are experiencing a price surge and Ethereum (quotation ETH) is currently up more than 34% year-to-date.
If you've been waiting for light at the end of the tunnel during the cryptocurrency winter, this recovery is promising. But it's not clear how long that will last, especially as many economists are still predicting a recession.
Is it the right time to invest in Ethereum? Or is it better to wait a bit? It depends on some factors.
Is Ethereum a safe investment?
Cryptocurrencies, in general, are a high-risk investment because they are still speculative. Not even the experts can say for sure whether or not it will be successful in the long run, and there's always the possibility that the whole industry won't survive.
That said, Ethereum is one of the strongest players in the cryptocurrency space. Not only is it the second largest cryptocurrency after Bitcoin, but it is also the most popular blockchain for various decentralized applications, from decentralized finance (DeFi) projects to non-fungible token (NFT) markets, to metaverse uses.
Of course, Ethereum isn't perfect and still struggles with slow transactions and high gas tariffs. But the developers have several updates in the pipeline that will help improve the blockchain, which is reassuring for investors.
The opportunity to buy now
When deciding whether to invest now or wait, it's important to keep a long-term view. Cryptocurrency should not be seen as an “easy money” scheme, but it can potentially make you a lot of money over time.
For example, even though the price of Ethereum is down more than 66% since its peak in late 2021, it has still seen growth of around 115% over the past five years and a staggering 54.000% since its inception in 2015.
In other words, if you had invested just five years ago, you would have already more than doubled your money – and this despite last year's cryptocurrency crash.
It is not known whether Ethereum will return to this type of return. But since its price is still significantly low from all-time highs, this could be a smart time to buy at a discount. Even if Ethereum doesn't post astonishing returns, getting closer to its peak again could lead to substantial gains.
When to avoid investing
Despite its benefits and growth potential, Ethereum isn't for everyone, and there are a few reasons why you might want to avoid investing in it for now. First, it is still a high-risk investment. The speculative nature of cryptocurrency means there is always the possibility of losing money. If this is a major concern for you, this investment may not be the most suitable one.
Also, invest only if you can afford to leave your money on the market for the foreseeable future – ideally, at least for several years. As the last year has shown, cryptocurrencies can be extremely volatile in the short term. If prices fall further and you have to withdraw your money, you could end up selling your investments at a steep loss.
Finally, make sure you take a long-term view when investing in cryptocurrencies. While it is possible to achieve substantial returns in just a few weeks or months, you are more likely to achieve positive total returns if you stay invested for several years. There's no surefire way to make a ton of money overnight, and if you're looking to get rich quick with cryptocurrencies, you're likely to be disappointed.
Ethereum has had a strong year so far, but the future is still uncertain. If you believe in its long-term potential and are willing to hold your investments for the next few years, now could be the right time to buy.