All eyes are on Ethereum (ETH +0.14%) this week. As measured by market capitalization, the second-largest cryptocurrency reached an all-time high price of $4.865 per token on Nov. 10, boasting a 52-week return of 894% on the evening of Monday, Nov. 15. A sudden crash followed the next Tuesday, taking the cryptocurrency all the way down to $3,971 per token.
Are the record-level Ethereum prices a sign of even greater gains to come, or is the bearish price cut a better predictor in the long run? Is it already too late to jump aboard this particular cryptocurrency bandwagon -- or should you pick up Ethereum tokens at a modest discount?
I think we have a solid Ethereum-buying window on our hands this week. Here's why.
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Cryptocurrencies are here to stay
The young cryptocurrency market is maturing and evolving as we speak. Let me run a few examples by you:
- Digital payments veteran PayPal already supports cryptocurrency payments, including Ethereum transactions.
- Financial powerhouse Bank of America now says that the digital asset market is "too large to ignore," with a particular focus on blockchain-powered financial technology systems.
- Some retailers will take your Ethereum tokens as payment for their goods and services. Examples of this include movie theater chain AMC Theaters and e-commerce retailer Overstock.com. Actually, direct support by PayPal and other digital payment platforms means that tons of businesses already accept cryptocurrency payments that have been translated into U.S. dollars by the cash-transfer system. The businesses mentioned here just choose to trumpet their cryptocurrency support at a louder volume.
- Burger King is giving away Ethereum and other cryptocurrency tokens in its latest marketing campaign. The Restaurant Brands subsidiary is not planning to accept crypto payments quite yet but that final step can't be far away after a splashy promotion like this one.
- It's not just a consumer trend, either. Blockchain technologies are popping up in every serious business worth its salt these days. For example, software giant Microsoft and Chinese e-commerce veteran Alibaba are co-developing a piracy-fighting system for software, media content, and other types of intellectual property. The proposed system relies on -- you guessed it! -- the Ethereum blockchain ledger and its smart contracts.
We could do this all day long, so let's just stop there. The point is, cryptocurrency assets in general and Ethereum in particular are quickly becoming essential parts of everyday life.
Ethereum plays an essential role in this industry
We're not talking about any old garden-variety cryptocurrency. Ethereum is special because many other digital currencies simply wouldn't exist without it. Many different projects have a vested interest in making sure that Ethereum sticks around, is functional, and offers effective smart contract functions.
Sure, there are alternatives to Ethereum's token-launching role and smart contract functions. Rivals such as Avalanche and Cardano arguably do what Ethereum does but better and faster.
Still, these Ethereum alternatives are not going to take Ethereum's already-launched projects away from the granddaddy of smart contract platforms. They can only hope to attract the next hot decentralized finance (DeFi) project. And since Ethereum's projects account for 67% of the total locked-in value of the $180 billion DeFi ecosystem, this grand old blockchain platform isn't going away anytime soon.
Image source: Getty Images.
This is the time to take action
I'm convinced that cryptocurrencies have passed the point of no return. There will surely be market crashes and price corrections in the future but I would be shocked to see blockchain systems going away entirely. Every crash should lead up to yet another recovery, followed by long-term gains in a healthy system of economic forces.
In a market with this type of long-term stability, investors should be rewarded in the long run if they pick up solid winners at a discount along the way. You've heard all the proverbs: "Buy when there's blood in the streets," "buy on the dips," "be greedy when others are fearful," and so on. They all apply to this week's cryptocurrency meltdown, at least for the established household names. Bitcoin will be back to fresh all-time highs soon enough, and so will Ethereum.
Picking up a token or two -- or a fraction of a token, if your investable cash reserves or market risk appetite are on the modest side -- should serve you well for the long haul. Just remember not to sell in a panic when the road gets rough again.
Because that will happen, too.
