Ethereum (ETH 0.40%) has struggled in recent months, wiping out its 2025 gains and more. As I write (Feb. 12), it has fallen 40% in the past three months to $1,909.74 -- down over 60% from its all-time high of $4,946.05.
CRYPTO: ETH
Key Data Points
While volatility is to be expected in crypto, such a dramatic drop can make investors wary. Not only is there a possibility that it will fall further, but there's also a concern about whether the slump reflects long-term problems. Those are legitimate worries.
However, if you have $100 to invest in crypto, Ethereum is a solid choice. It is the backbone of the decentralized finance, stablecoin, and tokenization industries. These could represent the most significant real-world use cases for cryptocurrency since Bitcoin (BTC 0.60%) came onto the scene in 2009.
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As financial transactions move on-chain, Ethereum is in pole position
Last year saw some seismic shifts in the cryptocurrency world, particularly for programmable cryptocurrencies like Ethereum, where stablecoins are built. The U.S. government passed stablecoin legislation that legitimized these tokenized versions of traditional currencies. It paved the way for existing banks and payment processors to explore stablecoins and other blockchain solutions.
Surging stablecoin optimism then fueled some pretty impressive predictions about the stablecoin market. For example, Citigroup analysts think it could reach between $1.9 trillion and $4 trillion by 2030. Right now, the stablecoin market is worth about $307 billion. Best case scenario? We're talking about a potential market growth of around 1,200%.
Over 50% of stablecoins are currently issued on Ethereum. As such, we can still expect the value on the Ethereum blockchain and transaction volume to increase dramatically. And historically, that's driven its price upward. It probably won't hold that level of dominance as the industry evolves, in part because new entrants may create their own private blockchains rather than rely on existing infrastructure. Even so, if stablecoins take off, there's a good chance it will supercharge Ethereum usage.
Tokenization could also boost Ethereum
Stablecoins are only the tip of the on-chain iceberg. Currency is just one of many assets that can be tokenized. Tokenized Treasuries and money markets gained traction last year. There are moves afoot to tokenize stocks and other equities, as both Nasdaq and the New York Stock Exchange explore ways to integrate on-chain trading. Tokenized private equity could make early stage investment more accessible to retail investors.
One advantage of stablecoins and other tokenized assets is the speed and low cost of transactions. Global transfers can take place around the clock. And, when it comes to stablecoins, legislative progress has already reduced some of the risks involved. Stablecoins issued in the U.S. have to be backed by real-world assets. That said, further regulatory steps and massive systemic change will be necessary before on-chain transactions become the norm.
It's important to consider how $100 of Ethereum might fit into your portfolio. Ethereum has strong potential, but all cryptocurrencies are high-risk and should make up only a small part of a balanced portfolio. If you want to buy Ethereum without opening a crypto account, crypto exchange-traded funds (ETFs) can be a good way to get exposure from your existing brokerage.
