Once upon a time, what historians call November 2021, Ethereum (ETH 0.27%) was worth more than $4,890 per digital coin. Then a bitter crypto winter set in, driving Ethereum prices all the way down to $896 last summer.
Today, the roller-coaster ride stands at the $1,633 station. Can the largest and oldest blockchain platform for smart contracts reach new all-time highs of $5,000 or more in 2023?
The short answer is, "maybe." The most honest answer I can give you is, "probably not; ask again next year."
To see the long answer, and my recommendations for Ethereum investors, keep reading.
The final destination
I expect cryptocurrencies and smart contracts to disrupt economic systems around the world. The next generation of banking, money transfers, insurance, and asset management will look radically different. Go-betweens are dropping out of the equation, transactions will be faster and more automated, fees are going lower, and I'm just scratching the surface of what a decentralized financial system will look like.
Ethereum is one of the oldest and most respected cryptocurrencies on the market, with a larger group of app developers and projects than its younger rivals. It is also under active development, as seen in last summer's Merge and an ambitious long-term road map. So as the crypto market evolves, Ethereum should stay in the vanguard.
Given this potentially spectacular future, Ethereum should gain a lot of value over time. And $5,000 should be an early stop on a long ride up. Growth investing superstar Cathie Wood of Ark Invest fame expected Ethereum to reach "triple-digit" prices before 2030. That prediction may sound outdated since she published it nearly one year ago, but Wood has also doubled down on her long-term faith in Ethereum more recently.
Speed bumps in the road ahead
However, those promising targets are pointing a few years into the future. Ethereum looks like a robust long-term investment, but I can't guarantee that it will make you a fortune in 2023.
Decentralized finance is in its infancy, with as many stumbles as success stories. The Ethereum 2.0 development is incomplete after The Merge, leaving many crucial technology improvements for future platform upgrades. In addition, investors and consumers need time to rebuild their general trust in cryptocurrencies after multiple cash-burning scandals in 2022. And we are still waiting for sectorwide catalysts such as a firm regulatory system for crypto trading and ownership or large-scale involvement by banks and institutional investors.
The $5,000 price target is more than triple Ethereum's current price. Meeting it this year is a tall order, requiring many uncertain events to work out in Ethereum's favor -- and quickly.
So Ethereum may very well double in price this year, and maybe even triple. Crypto winters melting into a new spring can have that effect. At the same time, the gains can also take years to develop and Ethereum's price might dip again along the way.
How to invest in Ethereum this year
In other words, it's not a good idea to bet the literal farm on Ethereum right now. Building your holdings more patiently makes far more sense, allowing you to take advantage of the current price dip, as well as the potential potholes of the future.
Investing in Ethereum and other cryptocurrencies is really not different from buying stocks. Get-rich-quick schemes rarely work out in your favor, while patiently building your portfolio for the long haul is the real secret to lasting wealth.
Therefore, I recommend picking up some Ethereum coins (or fractions of coins) in several buys across 2023. If it reaches that tantalizing $5,000 level, you'll celebrate getting in early enough to triple some of your first investments. And if the price chart dips again, your celebration will be just as heartfelt when Ethereum zooms past $5,000 to Cathie Wood's triple-digit targets in a few years.
It's just a matter of time and patience. Life in Wall Street's fast lane can be slow sometimes.
