The last time I wrote about Ethereum (CCC:ETH-USD) was mid-February. At the time, it was trading over $1,800. I suggested that its value had gotten a bit ahead of itself.
Sure enough, eight weeks later, Ethereum is trading around the same price, showing some gains only after Friday’s abrupt surge to $2,000.
Have investors grown tired of cryptocurrencies? I’ll consider the possibility.
Ethereum Versus Other Cryptocurrencies
Here’s a look at the performance of five 0f the top cryptocurrencies year-to-date and since my article in mid-February.
|Cryptocurrency||YTD return||Feb. 12 to April 5 return|
|Stellar Lumens (CCC:XLM-USD)||262%||24%|
Of these five cryptocurrencies, Bitcoin, Stellar and Cardano have clearly gotten the lion’s share of performance the past few weeks. They are also showing impressive gains for the year.
Perhaps that’s why InvestorPlace’s Thomas Yeung recently suggested that investors need to take Cardano very seriously.
But don’t mistake Cardano for a flash in the pan; it’s already one of the most technologically advanced cryptocurrencies on the market. And though the coin still has a long way to go, its newfound price strength gives its developers the ammunition to go after Bitcoin and Ethereum’s dominance.
My colleague argues that Cardano has the technological underpinnings to give traditional banks a run for their money. That makes this cryptocurrency very intriguing in much the same vein as Ethereum.
To me, the real winners in cryptocurrencies will be those that have real-world applications other than being a digital store of value.
However, even Cardano’s performance has tailed off in recent weeks, suggesting that investors are taking a bit of a break from cryptocurrencies in general.
Where to From Here?
As I said, I believe that the cryptocurrencies that provide real-world application will be the big winners as things continue to develop in financial services. A recent article that appeared in Benzinga highlighted a company called Reinno that’s created fractional ownership of commercial real estate through tokenization.
“The process for tokenizing is relatively simple: Owners get in touch with Reinno, provide evidence of ownership, as well as supporting documentation and proof of occupancy,” wrote Benzinga contributor Renato Capelj.
People keep talking about the democratization of investing using examples such as Robinhood to make their case when the best examples utilize tokenization like Reinno and others to come down the pike.
Consensys, a builder of Ethereum blockchain infrastructure, partnered with French asset manager Mata Capital in 2020 to tokenize 350 million euros of commercial real estate assets.
“Baptiste Saint-Martin, Product Development Manager at Mata Capital, explains that the long-term vision of the project is to ‘build an investment platform that allows anyone to invest in private equity, real estate, infrastructure, or private debt with less than one euro, while respecting all the regulatory standards,’” Consensys’ May 29, 2020, blog post stated.
As I’ve said on several occasions, when I could invest $100 in 25 different stocks from 25 stock exchanges in the blink of an eye, then I’ll be persuaded the democratization of investing really exists. Mata Capital obviously feels the same. Providing commission-free investing hardly qualifies as such.
Therefore, if I could only own one cryptocurrency and my choices were Ethereum or Bitcoin, 100% of the time, I’d go with the former rather than the latter.
The Bottom Line
Recently, investors have become mesmerized by the sale of non-fungible tokens (NFTs). Christie’s was able to sell $69.4 million worth of digital art paid for entirely with Ether.
As NFTs continue to grow in popularity, Ethereum will ride that popularity to an even bigger and more dominant position within decentralized finance and the democratization of investing.
Sure enough, eight weeks later, its price is surging, hitting an all-time high of $2,074.
Ethereum had been stalled at $1,800. I wondered if investors had grown tired of cryptocurrencies. My guess, given the Good Friday gains, is that it hasn’t. That said, I’ll consider the possibility.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.