Cryptocurrency prices may be dropping, but that also means now is the cheapest time to go invest. Major cryptocurrencies like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) have dropped more than 40% since November last year, and investing now means buying at a discount.
However, it is important to choose wisely when deciding where to invest. Especially with all the volatility in the market right now, not all cryptocurrencies will survive in the long term.
While there are never guarantees with cryptocurrencies (and there's a chance that even the strongest investments aren't around forever), there's one cryptocurrency, in particular, that I keep buying: Ethereum.
The biggest advantages of Ethereum
There is stiff competition in the cryptocurrency space, with new tokens being developed every day. This makes it particularly challenging for any investment to stand out, but there are a few reasons why Ethereum is a strong competitor.
For one thing, Ethereum is a programmable blockchain that can host everything from non-fungible token markets (NFTs) to decentralized finance applications and more. This makes it more than just a payment coin, so even if cryptocurrency doesn't catch on as a form of exchange, Ethereum could still have lasting power.
The programmable aspect of the Ethereum network also makes it a strong competitor in the metaverse, which will rely heavily on blockchain technology and decentralized applications. Ethereum is a major player in these spaces, and if the metaverse takes off, Ethereum could be one of the biggest winners.
Finally, the latest Ethereum update could give it an even more significant advantage. Right now, the biggest hurdles it is facing are its slow transaction times and high fees. It is currently being upgraded to a proof of stake (PoS) model, however, which should address both of these issues.
After the upgrade (which is expected to be completed next year), it could see transaction times of up to 100.000 transactions per second, compared to its current rate of around 14 transactions per second.
Should you invest in Ethereum?
Ethereum is one of the strongest players in the cryptocurrency space, but it isn't suitable for everyone. Before buying, there are a few things to consider.
First, think about how much risk you are willing to take. While Ethereum has a ton of benefits, there are no guarantees that it (or cryptocurrencies in general) will be successful in the long run. Since cryptocurrencies are still speculative right now, there is a possibility that you could lose your entire investment if it fails.
Also, consider how much volatility you are comfortable with. Even if Ethereum thrives over time, there will likely be many ups and downs along the way. It is not unusual for cryptocurrency prices to plummet on a regular basis. In fact, Ethereum once lost around 95% of its value in 2018. If you're not comfortable with this level of volatility, it might be wise to steer clear of cryptocurrencies for now.
Finally, make sure the rest of your wallet is well balanced before diving into cryptocurrencies. Since Ethereum is relatively high risk, it is important that the rest of your investments are diversified. That way, if Ethereum isn't successful over time, it won't sink your entire wallet.
Ethereum can be a fantastic investment, but it's important to think carefully about whether cryptocurrency is the right option for you. Considering your risk tolerance, it will be easier to decide if Ethereum belongs in your wallet.
