Cryptocurrencies are a relatively new asset class, but they are here and rapidly expanding.
To date, there are more than 15 million cryptocurrencies, giving investors virtually endless choices. But given how risky and volatile crypto is as a whole, it may be wise to keep things simple. Ethereum (ETH -2.57%) has been around for a decade and is the world's second-largest cryptocurrency by market value.
Ether, the native token for the Ethereum network, has been on a tear lately; its market price has almost tripled since April, and it's beginning to approach its all-time high, set back in 2021 at the peak of a previous crypto bull market.
But things have changed since 2021, and the coin's recent rally may have some serious legs. Here are three reasons why it's one of the best cryptocurrencies you can invest $100 in right now.
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1. Regulatory tailwinds
To start, look no further than the regulatory tides lifting all the cryptocurrency boats. The Trump administration has been a tremendous ally to the cryptocurrency industry by:
- Peeling back regulatory scrutiny and litigation against companies in the industry.
- Planning to establish a federal Bitcoin reserve and digital asset stockpile via executive order.
- Helping to pass the Genius Act, which is aimed at establishing clearer regulatory frameworks for digital currencies and their real-world applications.
These moves are a step toward making cryptocurrencies a mainstream asset.
2. Institutional money flowing in
Institutional interest is gaining steam as the regulatory climate thaws. Corporations, banks, and investment funds have substantial buying power.
The U.S. Securities and Exchange Commission approved the creation of spot Ether exchange-traded funds (ETFs) last summer. These ETFs hold Ether on behalf of the fund's investors, giving people a simple way to invest without having actual custody of the tokens. That means no need to fuss with wallets or seed phrases. Since then, more $12 billion has flowed into U.S. spot Ether ETFs.
Additionally, President Donald Trump recently signed an executive order that would pave the way for retirement accounts like 401(k)s to have access to alternative assets, such as cryptocurrencies. With time, this could spark further interest in Ether and other cryptocurrencies. There are more than $40 trillion in total U.S. retirement assets, and even a tiny fraction of that going into digital assets could mean a massive inflow of funds.
3. The Ethereum network is evolving
Smart contracts could eventually play a significant role in society. A smart contract is a digitally coded agreement that automatically executes an action under the specified conditions. A blockchain is a decentralized and secure ledger system, an ideal avenue for smart contracts. The Ethereum blockchain is currently the largest, by a wide margin, based on its total locked value, with more than $121 billion in smart contracts. The next closest are Tron and Solana, with just over $8 billion and $6 billion, respectively.
To stay on top, the Ethereum network has a roadmap for upgrades. Previously, the Merge transitioned Ethereum from a proof-of-work system to a proof-of-stake system. This reduced the network's energy consumption, improved its security, and set the stage for several planned upgrades.
Those upgrades include the Verge, Purge, and Splurge, which will make the network more efficient, lower transaction fees, and enhance scalability, enabling nodes to run on smaller hardware devices, such as smartphones. While there is competition from other blockchains, and Ethereum isn't the best at everything, its current size and continuous improvements bode well for its future as a pillar of the digital economy.
Ether's price outlook looks promising
It's anyone's guess how high Ether's price will go, and it's bound to be volatile. That said, Ethereum looks like a strong buy for long-term investors. The token's price still hasn't cleared its all-time high from back in 2021, something Bitcoin did at the beginning of last year. Additionally, its fully diluted market value is still just a quarter of Bitcoin's.
That doesn't mean that Ether is bound to catch Bitcoin, but Ethereum is the world's largest blockchain, and its valuation doesn't reflect that yet. Smart contracts could see increased adoption during the next several years as regulatory barriers fall, which, along with continued inflows from investors and institutions, could drive Ethereum's usage and Ether's price higher over time.
