It’s been more than two months since I last wrote about Ethereum (CCC:ETH-USD). At the time, Ether was trading around $3,800. Since the beginning of the fourth quarter through Dec. 28, ETH-USD has mostly traded above $4,000, getting as high as $4,843 in November.
Despite the sideways movement of Ether, it will finish 2021 up more than 400%. If it were a stock, you would be happy as a clam with your returns. However, compared to some of Ethereum’s smaller cryptocurrency competitors — Solana (CCC:SOL-USD) is up more than 9,000% year-to-date — 2021 was the Year of Moving Sideways.
In the first quarter of 2022, Ethereum supporters count on the coin’s price continuing to move higher. I believe it will. Here’s why.
Ethereum Price Predictions
Given the lack of fundamentals cryptocurrencies possess, price predictions are always interesting. They vary considerably.
InvestorPlace Assistant News Writer Shrey Dua recently covered some Ethereum price predictions for 2022. In the near term, FXStreet suggested Ether could hit $4,533, a 22% jump in price (Dec 31 prices). More extended forecasts include $5,000 by the middle of 2022 (Coin Price Forecast) and $6,989 by the end of 2022 (Wallet Investor).
So, if Ethereum hits $4,533 by the end of March, I don’t think there’s any question that $5,000 by the beginning of July and $6,989 by next December are achievable. Based on current prices, hitting all three of these targets would mean a 2022 return of 87.5%.
That’s quite a comedown from 400%+ in 2021.
However, if accurate, there are plenty of other price predictions that could deliver significant appreciation not just in 2022 but over the next few years. Capital.com reported that DigitalCoin sees ETH-USD hitting $6,380 in 2022, $7,569 by 2025, and $16,858 by 2028.
If all of the numbers from above come true, we’re talking about a compound annual growth rate of 24.06%. An excellent return for most investors, but I suspect many crypto investors will be disappointed by such a deceleration in prices.
Mark Cuban Suggests Its Utility Is Key
I’ve always said that the best crypto investments over the long haul will be the ones that provide the most utility. So Cardano (CCC:ADA-USD) and Solana immediately come to mind.
“‘I like [ether] more [than bitcoin] because I can see an unlimited number of applications that will change the biz [and] consumer world forever,’ Cuban tweeted on Oct. 16. ‘And to use them, you need to buy [ether],’” CNBC’s Taylor Locke reported in November.
While he sees Bitcoin as an excellent alternative to gold, Cuban thinks Ethereum is the best investment because of its utility.
While I continue to watch the development of other Ethereum-related cryptos to see if their utility can surpass Ethereum’s, I think it’s fair to say that Cuban’s assessment isn’t far off the mark.
The Bottom Line
As we head into 2022, I don’t think there’s any doubt that the coming year will be full of new developments in cryptocurrencies and the blockchain that will forever change the world.
What those new developments will be, I really couldn’t say, except to point out that Ethereum 2.0 will be one of them, and that ought to put upward pressure on its coin price.
Here’s what I wrote about Ethereum in October: “The one thing I’ve consistently said about cryptocurrencies is that their ultimate success lies in their utility. In my last piece about Ethereum, I discussed how Ethereum 2.0 would increase its utility considerably, boosting the transactions it processes per second from 30 today to more than 100,000 in Ethereum 2.0.”
“Once it meets this number, the world will be its oyster. In the meantime, true Ether believers ought to sit tight and chill,” I added.
If you own Ethereum, don’t worry about your bet. Once Ethereum 2.0 fully emerges, you will benefit immensely. In the meantime, sit back and enjoy the ride.
That said, make sure you keep your seatbelt fastened at all times; the flight’s likely to be a bumpy one.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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.