Cryptocurrencies may have lost some of their appeal as token prices have plummeted, but now could also be an affordable time to invest.
The price of Ethereum (ETH 0.12%) is down by more than 60% from the all-time high it touched in November. While that may not sound like positive news, it also means that there's an opportunity to buy at a steep discount. If Ethereum's price rebounds, today's buyers could see substantial gains.
Is it possible to become a millionaire by investing in Ethereum, though? That depends on a few factors.
Image source: Getty Images.
Will crypto prices recover soon?
The recent crypto crash has naturally unsettled investors in the digital assets. Further, because all cryptocurrencies are speculative, it's impossible to predict whether any investment in them will succeed over the long run.
That does make Ethereum a riskier place to put your money, and there are no guarantees that you'll make substantial profits -- or any -- by doing so. That said, Ethereum is one of the stronger cryptocurrencies out there, and it does have a better chance of surviving than many other tokens.
What does the future look like for Ethereum?
Ethereum is one of the most popular blockchains. It's the leader in the decentralized application (dApp) space, hosting everything from non-fungible token (NFT) marketplaces to decentralized finance (DeFi) projects to other cryptocurrencies.
It's also becoming a standout option for companies attempting to build metaverse applications. For example, its blockchain is host to both The Sandbox (SAND 0.98%) and Decentraland (MANA 1.66%), two of the most popular virtual gaming platforms today within what is expected to become the metaverse.
If any of these projects -- whether NFTs, DeFi, or the metaverse -- take off, Ethereum will benefit from it. Those add to its potential advantages over other cryptocurrencies, giving it a stronger overall investment thesis.
Where Ethereum falters
No cryptocurrency is perfect, though. Potential buyers should consider Ethereum's disadvantages as an investment, too, to determine whether it's a risk they're willing to take.
Among Ethereum's most pressing problems are its slow transaction times and high fees. Currently, the network can process around 13 transactions per second. That sluggishness makes it challenging for Ethereum to scale, and it also results in higher transaction fees for users.
As a result, many developers and users have flocked to newer networks that boast faster speeds. So-called "Ethereum killers" such as Solana (SOL -1.32%) and Cardano (ADA 0.26%) have become more competitive, and Ethereum will need to resolve these issues to remain a leader in the crypto space.
The good news is that Ethereum is currently rolling out an update that will dramatically increase its speed (potentially up to 100,000 transactions per second) and reduce transaction fees. The final phase of the update isn't expected to be completed until 2023, however, which gives its competitors a lot of time to catch up.
Should you invest in Ethereum right now?
Despite its flaws, Ethereum is still one of the strongest cryptocurrencies out there. That doesn't mean it's guaranteed to succeed, though. All cryptocurrencies are speculative, so if you choose to invest, be sure you have a high tolerance for risk.
Also, only invest money you can comfortably afford to lose. Nobody can say for certain whether cryptocurrencies will survive over the long term, and there's always a chance you could lose much or all of the money you put into the tokens.
Finally, be prepared to weather more volatility. Even if Ethereum succeeds over time, it will likely travel a bumpy road along the way. But if you're willing to hold your investments for the long run despite short-term turbulence, Ethereum could be a good fit for your portfolio.
