Cryptocurrencies got off to a bad start in 2022 and Ethereum is no exception. After reaching a new record price last November, its price has now fallen by 35%.
For many analysts, however, the turmoil in the cryptocurrency market is an opportunity to invest smartly as prices are lower.
Motley Fool’s investment advisors specifically recommend Ethereum and the reasons are as follows:
Its foundations are still strong
Whenever a cryptocurrency starts to fall, it is important to think about why this is happening. Sometimes prices fall because the cryptocurrency is not a strong investment and there is a flaw that worries investors. Other times, however, external factors are responsible for the price drop.
Now, Ethereum is essentially the same cryptocurrency it was two months ago when its price was peaking. Its fundamentals have not changed and the drop in price was logically caused by the Fed’s decisions and the uncertainty in the economy and the crypto market.
But that doesn’t mean it’s a sure thing that Ethereum will recover after this drop. But because its fall is basically due to investor uncertainty, it will logically recover at some point.
It’s a long-term investment
Regardless of whether you invest in cryptocurrencies or stocks, you need to take a long-term view on investing.
No one knows how long this decline will last, and things could get worse for Ethereum. However, if you’re willing to wait, Ethereum prices will logically recover.
Despite the volatility, Ethereum has announced that it will be making some upgrades that will make it an even better investment. For example, the Ethereum 2.0 upgrade is expected to make the network significantly faster, save energy and have lower transaction fees.
The upgrade will be completed sometime this year and will make Ethereum even stronger.
Volatility is normal for cryptocurrencies
While it causes anxiety for investors, this volatility is common in the crypto market. In 2018, Ethereum lost nearly 95% of its value. Therefore, its latest 35% decline doesn’t seem that big.
If you buy Ethereum, expect more volatility, especially in the coming weeks and months. However, short-term volatility shouldn’t worry you. The best thing you can do is to hold on to your investments for as long as you can and not stress about market fluctuations.
