Despite the recent pullback, Ethereum (CCC:ETH-USD) wrapped up another incredible year. ETH-USD has gained over 200% this past year, comfortably eclipsing Bitcoin’s gains. Ethereum’s robust ecosystem facilitates multiple use-cases which are currently unmatched by any digital asset. As we advance, ETH-USD will continue to see more upside supported by numerous positive tailwinds.
The crypto market came of age during the pandemic. Since 2020, the market has provided mind-boggling returns to investors, and despite some headwinds, it has held strong to date. We have also seen the emergence of meme coins, which have fluctuated wildly in price based purely on hype.
However, Ethereum represents the gold standard in cryptocurrencies, with its use cases having massive addressable markets. Moreover, most of its digital applications are in their early adoption phases with tremendous growth runways.
Therefore, ETH is a no-brainer for any crypto investor, which is expected to continue growing at a healthy pace in 2022.
The Ethereum network has a laundry list of use-cases, making it the most popular blockchain network. However, its value in decentralized finance (DeFi) sets it apart from its peers. The platform aims to become a decentralized world computer to facilitate the execution of smart contracts.
Over 3,000 DeFi apps have been developed on the Ethereum network already and are likely to grow exponentially in the future. The DeFi market has a valuation of over $100 billion, and Ethereum is a major part of this market. On top of that, new DeFi markets such as non-fungible tokens (NFTs) are taking the world by storm and are expected to be a critical part of the metaverse.
The sheer scale of the network can easily capture a substantial share of the decentralized Web 3.0 value. However, Web 3.0 is still in its infancy, and it’s still unclear what its use cases will emerge with Ethereum.
Outlook on ETH-USD
It will be interesting whether Ethereum could replicate its success over the past couple of years in 2022. The bears are skeptical of its long-term growth due to the crypto market’s regulatory concerns.
China banned cryptocurrencies last year, and some experts believe it may open up the floodgates. However, the situation with the market leaders is significantly different in comparison with other cryptos. Securities and Exchange Commission (SEC) Chairman Gary Gensler alluded to the fact that the U.S. may not ban cryptocurrencies. The financial market framework will be accommodating cryptocurrencies within the banking sector.
Another catalyst for Ethereum is that its supply is likely to shrink by roughly 2% annually. This is likely to have a deflationary effect and support higher prices in the future.
However, the most important growth driver for Ethereum in 2022 is its transition to a “proof-of-stake” model from a “proof-of-work” model. The transition will ultimately reduce mining energy consumption by roughly 99%.
Next year, the merger of Ethereum’s main net with the beacon chain will be complete. The setup will likely make ETH-USD an environmental, social, and governance (ESG) friendly token, adding another feather to its proverbial cap.
It remains to be seen how some of these developments will increase the token’s usage. However, it’s not implausible to assume that its upgrades will attract several more developers in the coming year.
Ethereum has had a stellar year, and you should expect more of the same next year. The platform offers more real-world utility than all of its peers and will continue to evolve with the development of new digital markets.
The good news for ETH investors is that its transition to a point of sale (POS) system will make it more efficient and process transactions much swifter than in the past. Hence, ETH is a must-buy for any crypto investor and is a more compelling buy than Bitcoin at this time.
On the date of publication, Muslim Farooque held a LONG position in Ethereum. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.