Ethereum (CCC:ETH-USD) is hitting all new highs, soaring over $4,500 for the first time on Nov. 2. But for all of those investors who are thinking about taking their profits and running, I’ve got a single word of advice.
Not yet, at least. Or maybe, not ever.
While I see the inherent logic of cashing out of a position at its peak, I don’t think that Ethereum is anywhere close to getting there yet. In fact, I think that Ethereum is a far better alternative than buying Bitcoin (CCC:BTC-USD). And you can get a lot more of it for your money, too.
Ethereum’s Sky-High Ride
Just a year ago, ETH-USD could be bought for less than $400. But in January, Ethereum and other popular cryptocurrencies began a run that would make a lot of crypto fans giddy with joy.
Bitcoin, of course, gets most of the attention. And thanks to the Reddit crowd and Elon Musk, Dogecoin (CCC:DOGE-USD) is getting some attention as well. But for the casual investor, Bitcoin is the benchmark.
And Bitcoin has had a good year. It has gone up more than 300% over the last 12 months to top $63,000 per coin.
But that’s nothing compared to Ethereum. Over the last year, ETH-USD is up a whopping 1,000%.
That kind of crazy growth could continue for the foreseeable future, according to analysts at the U.K.-based bank Standard Chartered. Those analysts say that the price of Bitcoin could triple, easily crossing the $100,000 barrier.
And as for Ethereum? Those analysts say the Ethereum price could rise by a factor of 10.
According to Forbes, the bank says that at some point in the future, the price of ETH-USD will actually surpass Bitcoin.
Why Ethereum Has Staying Power
Ethereum is undergoing a lot of changes these days that, I believe, will help push ETH-USD into the mainstream. This is the start of the journey that should help Ethereum challenge Bitcoin for cryptocurrency supremacy.
I actually wrote about this a couple of months ago. Ethereum was launched in 2015 with a proof-of-work (PoW) consensus protocol much like Bitcoin. But there were lots of complains that PoW is too slow and expensive for Ethereum over the long haul.
So Ethereum 2.0 changes from PoW to proof-of-stake (PoS) that should solve those kind of problems.
The first part of this change was the launch of Ethereum’s Beacon Chain. Next, the Beacon Chain will be combined into the Ethereum mainnet. And then sometime in 2022, Shard Chains will split the network to allow for greater capacity in storing data and processing transactions.
When it’s done, Ethereum should have greater scalability and speed to support more transactions. It should use less electricity and have a reduced carbon footprint. And it will have better security.
These changes will also take a huge bite out of the so-called Ethereum killer cryptocurrencies that operate on open-source blockchain protocols in an effort to capitalize on Ethereum’s PoW weaknesses.
The Bottom Line
Ethereum’s platform already is a major player in non-fungible tokens (NFTs) and decentralized finance (DeFi) applications. And that will only increase as Ethereum 2.0 rolls out.
So, you can expect Ethereum to have some staying power. And while it’s unreasonable to expect a 1,000% plus return from Ethereum every year, I do expect ETH-USD to be a top performer.
Cryptocurrencies, by nature, are much more volatile than the overall stock market. You can get huge returns, but you can also suffer significant losses in the blink of an eye. And remember, cryptocurrencies are unregulated, although that may change at some point.
Personally, I keep about 5% of my overall portfolio in cryptocurrencies. But Ethereum is by far my top choice in the space.
On the date of publication, Patrick Sanders was long ETH and BTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders.