Whether you're dipping your toes into crypto for the first time or you're a seasoned investor in digital currencies, it's hard to ignore Ethereum (ETH -0.47%). The world's second most-valuable cryptocurrency has come a long way in a short time, but in many ways it's just getting started.
It's not too late to grab a piece of Ethereum. Let's go over three reasons that now could be a good time for risk-tolerant investors to consider putting some money to work in the resilient cryptocurrency that is just six years old but already shaking up the planet in a good way.
1. Ethereum is a digital leader
There's a lot to like about Ethereum right now. It's not just a "store of value" vanity plate, rising merely on the hope that someone down the line will be willing to pay more than you did. Ethereum's programmable blockchain technology is powering real online businesses that go beyond just a perceived value of what a digital currency is worth.
No one comes close to powering the more than 3,000 decentralized applications (dApps) leaning on Ethereum for everything from NFT marketplaces to next-gen decentralized finance platforms. A lot of other crypto denominations are going through updates to follow Ethereum into smart contracts, but this is still the undisputed market leader in functionality on that front.
2. Ethereum 2.0 is going to be special
If you think Ethereum is useful and valuable now, just wait until a year from now. Ethereum is in the process of the mother of all makeovers. At some point in the coming months, it will make the shift from a proof-of-work model to proof of stake.
The transformation isn't just a matter of shifting production from miners to validators, silencing the arguments that the cryptocurrency (like other denominations relying on proof of work) is not environmentally friendly. The Ethereum 2.0 migration will also make Ethereum faster and cheaper to use. If there are any flaws in its game now, they should be rectified as soon as early 2022.
3. History is kind in December
Two weeks ago, I tapped Ethereum as my favorite crypto to buy this month, in part because it has historically done really well during the final month of the year. It has moved sharply higher in all but one December since its launch in 2015. That's a pretty impressive run.
- December 2020: 78%
- December 2019: 39%
- December 2018: (20%)
- December 2017: 48%
- December 2016: 35%
- December 2015: 148%
My timing two weeks ago was lousy. Cryptocurrencies have followed growth stocks lower, and Ethereum is trading 17% lower in December as of Friday morning. It's already close to rivaling the 20% slide it served up in December 2018, but one can argue that history is still on its side. Ethereum has risen by at least 35% in all but one of the six previous Decembers. We still have another two weeks to go before we close the book on 2021, and the 17% month-to-date decline gives it that much more upside from the current starting line.