It's no secret that the crypto market has been struggling over the past year. The entire sector has lost nearly two-thirds of its value since late 2021, with its market cap dropping from a staggering $3 trillion to around $1.19 trillion.
Many investors are also concerned that a recession is looming. If that happens, this crypto winter could drag on even longer.
The good news, though, is that a bull market is coming eventually. And there's one investment you may want to load up on now before prices surge: Ethereum (ETH -2.30%).
Why Ethereum is well-positioned for a bull market
Launched in 2015, Ethereum has proven that it can withstand market volatility. It's faced countless downturns over the past several years, including a particularly severe slump in 2018 when its price fell by a whopping 94%.
Ethereum Price data by YCharts.
While past performance doesn't predict future returns, Ethereum's long history is more promising than that of many other cryptocurrencies. Currently, its price is down by roughly 64% from its peak, which is far from the worst it's seen.
Ethereum's position in the crypto market also gives it a clear advantage. It's the primary blockchain for decentralized applications ranging from NFT marketplaces to DeFi projects to the metaverse. If any of those applications gain widespread usage, Ethereum will be in a great position to benefit from it.
Finally, Ethereum developers have proven that they're committed to improving the blockchain. Last year, The Merge went off without a hitch, successfully moving the network to a proof-of-stake protocol and vastly reducing its energy usage. And future updates will aim to reduce transaction times and fees, making the blockchain faster and more affordable for users.
Is crypto a smart buy right now?
When the entire market is shaky, it can be nerve-wracking to invest anywhere -- let alone in an industry that's famous for its volatility. Before investing in Ethereum, it's important to consider whether you're willing to take on the risk involved in buying cryptocurrency.
It's almost guaranteed that the stock market will recover from this downturn. After all, the market has existed for many decades and recovered from dozens of slumps during that time. Sooner or later, this bear market will give way to a bull market.
But crypto is still in its infancy, so there are no promises that this sector will survive over the long haul.
If the crypto market thrives, Ethereum may be a fantastic buy right now. Because prices are lower, you can stock up at a discount and then reap the rewards when the market recovers. But if crypto doesn't succeed over time, even the strongest investments may fail.
Before you buy, think about whether that's a risk you're willing to take. When in doubt, ask yourself which scenario you'd regret more: investing now and losing money if crypto fails, or not investing and missing out on potentially lucrative returns if crypto succeeds.
There's no right or wrong answer here, as your risk tolerance is personal. But it's important to understand the potential downsides involved when investing in crypto, as there are never any guarantees in this sector.
Weighing risk versus reward
Ethereum is in a unique position, as it's a strong investment in a speculative industry. The blockchain has several distinct advantages and is well-diversified across many different niches within the crypto space -- from NFTs to DeFi to the metaverse, and more.
But because crypto is still speculative, Ethereum's long-term success may hinge on whether the sector, as a whole, survives. Because nobody knows what the future holds for crypto, Ethereum is still a risky investment.
While there are serious risks to consider, it remains one of the strongest players in the field. And if there's one cryptocurrency I'm keeping in my portfolio for the long haul, it's Ethereum.
