In the first half of 2024, Bitcoin (BTC -0.03%) captured the imagination of crypto investors. But don't sleep on Ethereum (ETH -0.91%). Up 54% year to date, it has largely kept pace with Bitcoin, and it has one new catalyst in place that could send it soaring in the second half of the year.
So this could be the time to put Ethereum on your investment radar. There are three good reasons why it could soar past the $4,000 mark on its way to a new all-time high.
The new ETFs
The big catalyst, of course, is the imminent launch of the new spot Ethereum ETFs. If they enjoy anywhere near the same success as the spot Bitcoin ETFs, they could send the price of Ethereum soaring. During the first six months of the year, the spot Bitcoin ETFs pulled in $30 billion from investors, and that is what led to Bitcoin skyrocketing in price by 60%. The current thinking is that the new spot Ethereum ETFs could pull in as much as $3 billion in their first six months.
The only question, really, is when the new ETFs will start trading. The original consensus was the end of May. That was then pushed back to the end of June. And now SEC head Gary Gensler says it will be sometime before the end of the summer. Maybe by the time you're back from summer vacation, you'll be able to buy them.
Ethereum's market dominance
One underappreciated fact about Ethereum is just how dominant it is in many niches of the blockchain world. From decentralized finance (DeFi) to gaming, web3, and the metaverse, Ethereum is the clear market leader. Its blockchain technology powers so many of tomorrow's most powerful and interesting apps. That means more users, more developers, more active wallets, more transactions, and more cash flows than any other blockchain ecosystem.
Image source: Getty Images.
Case in point: In the world of DeFi, Ethereum currently accounts for 60% of all total value locked (TVL), one of the most important metrics for blockchain performance. By way of comparison, its chief rival Solana (SOL 1.85%) has only a 4% market share. Other up-and-coming rivals -- such as Sui and Aptos -- barely show up as blips on the radar. Thus, this group of "Ethereum killers" could pose less of an existential risk to Ethereum than originally feared.
New blockchain upgrades
I can't think of another cryptocurrency that gets more attention for its blockchain upgrades than Ethereum. It has followed up The Merge (a massive blockchain upgrade) with a number of smaller technical upgrades meant to make its blockchain faster and cheaper to use. Last year, we had Shapella. Earlier this year, we had Dencun. And now the buzz is building for the next upgrade, known as Prague-Electra.
There are two reasons these stepwise upgrades are so important. First of all, they make it easier for Ethereum to fend off its rivals. Yes, Solana might be faster and cheaper to use right now, but Ethereum is doing everything in its power to narrow the gap. The ultimate goal is the ability to process 1 million transactions per second, and each new upgrade brings Ethereum closer to this target.
Also, each new upgrade helps to build confidence in Ethereum's roadmap for the future. Unlike other cryptocurrencies, which often seem to have a helter-skelter feel to their overall development, Ethereum lays out a roadmap at the start of every year and patiently explains how all the steps in this roadmap fit together. I've always viewed this process as similar to the way that publicly traded corporations give guidance about upcoming results.
How high can Ethereum go?
Given these three factors, I think there's a reasonable chance that we could be talking about a new all-time high of $5,000 for Ethereum sometime by early 2025. That's a 40% gain from today's price of $3,500.
But $5,000 may be entirely too low a future projection for Ethereum. It's not hard to find analysts predicting a price of $10,000 for Ethereum. And investment firm VanEck thinks Ethereum is on a rocket to $22,000 by the year 2030.
In many ways, this depends on how well those new spot Ethereum ETFs perform. If the end of summer comes and they still are not trading, or if new investor inflows disappoint, then it might be time to tamp down expectations. If you are comfortable with assuming that risk, it could be time to start thinking about investing in Ethereum while it's still trading below $4,000.
