After a phenomenal year in 2021, Ethereum (ETH 4.47%) has had a rough few months. Since its peak in November, its price has fallen by more than 60% to roughly $1,800 per token.
To be fair, it’s not just Ethereum facing extreme volatility. The entire crypto market is in a slump right now, having lost more than $1 trillion over the past several months. But if you’re already invested or considering investing in Ethereum, this downturn could be concerning.
Should you still invest in Ethereum right now? Or is it better to wait? It depends on a few factors.
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Will Ethereum recover from this downturn?
Like all cryptocurrencies, Ethereum is still speculative at this point. Nobody knows for certain how it will perform over the long run, which makes it tough to say when or if it might rebound. There’s also a chance that crypto, in general, may not succeed over time, which makes all cryptocurrencies risky investments.
That said, Ethereum is one of the stronger cryptocurrencies out there. Its blockchain network is the most widely used for decentralized applications (dApps), such as non-fungible token (NFT) marketplaces and decentralized finance (DeFi) projects.
Developers are also working on rolling out an update to make Ethereum faster and more affordable for users. Once that update is completed (which is currently expected to happen in 2023), that could give it a major advantage over competitors. And the more advantages a cryptocurrency has, the more likely it will succeed over time.
So, keep in mind that crypto is still in its infancy. Extreme volatility is relatively normal for the sector, so a steep downturn isn’t necessarily a reason to panic. While there are never any guarantees in investing, it’s likely that Ethereum will pull through this slump.
Should you still invest right now?
Whether or not you choose to invest in Ethereum (or any cryptocurrency) will depend largely on your tolerance for risk. Despite its advantages, Ethereum is still a risky investment. There are no guarantees that it will see positive returns over time, and if it fails, you could lose all the money you invest.
Even if it does succeed, it will likely experience more extreme volatility along the way. The crypto market may face more regulatory hurdles in the future, and any potential hiccups in Ethereum’s upgrade could result in more volatility, too.
This also isn’t the first time Ethereum has seen a severe downturn. Back in 2018, the cryptocurrency lost nearly 95% of its value throughout the year. Although it did rebound from that crash, it’s further proof that Ethereum is no stranger to volatility.
Of course, there’s also a chance that Ethereum could be a lucrative investment in the long run, potentially making you a lot of money. If you’re willing to take on higher levels of risk for a chance at earning those types of rewards, now could be a smart time to invest, while crypto prices are at their lowest.
Finally, consider your overall financial situation before you invest. Because all cryptocurrencies are still speculative, only invest money you’re comfortable losing. While there’s nothing wrong with being optimistic about Ethereum’s future, it’s also important to consider the worst-case scenarios, as well.
Ethereum is one of the stronger cryptocurrencies, which means it has a better chance of recovering from this downturn. However, it still has plenty of risks, so it’s important to think carefully before you invest. If you’re willing to take on a more volatile investment, though, it could be a smart option for you.
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