There's no denying that Ethereum (ETH +2.27%) has been one of the best crypto investments of the past decade. At its current price of $3,500, Ethereum is up more than 10,000-fold from its initial price of just $0.31. As a result, an investment of just $100 in 2015 would have likely been enough to make you a crypto millionaire today.
But we're moving into Ethereum's second decade now, and it's no longer a slam-dunk certainty that you can become a crypto millionaire by investing at today's prices. If you are thinking about investing in it for that purpose, here are three important questions to ask yourself.
1. Does Ethereum still have 1,000x upside?
Let's assume for a moment that you have $1,000 to invest in Ethereum right now. For that initial investment to grow to $1 million, it would need to increase in value 1,000-fold. A decade ago, that was certainly possible. But what about today?
CRYPTO: ETH
Key Data Points
Remember: In 2015, Ethereum had the all-important first-mover advantage. It was literally the first smart-contract blockchain platform, and that opened up all kinds of new opportunities that even Bitcoin (BTC +1.27%) couldn't match.
So Ethereum went on to create, define, and control entire sectors of the blockchain world. From decentralized finance (DeFi) to blockchain gaming and non-fungible tokens (NFTs), it was not just the first to market. It was also best to market.
Unfortunately, Ethereum no longer has the first-mover advantage. There are plenty of new challengers, and plenty of blockchains that can offer exactly what it can offer, if not more. So it only makes sense that the explosive growth that characterized the early years of Ethereum might no longer be possible. That's bad news if you're expecting 1,000x upside.
2. How long can Ethereum remain the market leader?
There are now three direct Ethereum challengers -- Solana (SOL +1.48%), Avalanche (AVAX 0.43%), and Cardano (ADA +0.38%) -- that rank among the top 15 cryptocurrencies in market cap.
The appearance of these new challengers means that Ethereum's dominant market share in the various niches is slowly being eroded. So even if it is able to create entirely new blockchain niches (as it has for the past decade), the share of the market it will capture will likely continue to shrink over time.
Image source: Getty Images.
Of even more concern, some of these blockchain rivals are being viewed by investors as potential "Ethereum killers." This poses a clear existential threat.
When it comes to choosing blockchains, users and developers have a choice. And if the new Ethereum rivals continue to claim much higher speeds, enhanced throughput capacity, and lower fees, which blockchains do you think users are going to choose?
3. What will be the effect of the new ETFs?
Lastly, there's the question of just how much of a lift the new spot Ethereum exchange-traded funds (ETFs) are going to provide. Just about everyone agrees that there was much more demand and hype for the new spot Bitcoin ETFs.
The spot Bitcoin ETFs have pulled in more than $30 billion in customer funds. However, JPMorgan Chase thinks that the new spot Ethereum ETFs will pull in only $3 billion.
As a result, the spot Ethereum ETFs are likely to be much less impactful than many people think. If you're expecting the price of the crypto to soar as soon as these new ETFs start trading, you might be disappointed.
Setting realistic expectations
This might be tough to acknowledge, but Ethereum might only have 10x upside over the foreseeable future. And even that could be too optimistic. Given its current market cap of just over $400 billion, a 10-fold increase in value would imply a new market cap of $4 trillion. That's significantly more than Nvidia, which now has a lofty $3 trillion market value.
A $4 trillion valuation might have been possible back when Ethereum had a clear economic moat to keep away potential challengers. But the barbarians are now at the gate, and some of them are crossing the drawbridge.
For that reason, I'm unconvinced that Ethereum is still a millionaire maker. Unfortunately, if you are really serious about becoming a millionaire, you might need to find "the next Ethereum" -- an undiscovered crypto with 1,000x upside that you can buy for mere pennies. And that, as we all know, is a lot harder to do than it sounds.
