The cryptocurrency market is in turmoil right now. For a number of reasons, crypto prices are surging one day and crashing the next. This rocky road may shake out some weak names and bad actors, leaving the truly valuable cryptocurrencies to make the most of the market opportunities that remain.
Among this week’s many plunging crypto names, you’ll find Ethereum (ETH -0.43%) dropping down from a recent plateau of roughly $1,500 per token. In fact, Ethereum has retreated all the way down to roughly $1,300.
Is this the beginning of the end for Ethereum, or should investors get excited about this opportunity to pick up the second-largest crypto name on the cheap?
Ethereum Price data by YCharts
Why Ethereum prices are down
Ethereum executed a long-awaited technology upgrade in September. “The Merge” moved the cryptocurrency’s blockchain foundation from the resource-intensive proof of work model to a leaner and faster proof of stake design. The change also set the stage for further improvements, such as sharding and dramatically lower transaction fees.
This event was an absolutely necessary game-changer in the long run, giving Ethereum the tools it needs if its developers want to keep up with faster-by-design alternatives such as Solana (SOL 3.34%) and Cardano (ADA -2.28%).
But the Merge didn’t light a fire under Ethereum’s token prices. Instead, the leading smart contracts token traded sideways for a month, largely mirroring the moves of the S&P 500 stock market index. On days when stock investors backed away from high-growth names due to scary inflation reports, Ethereum tended to follow suit. Likewise, when better economic news drove growth stocks higher, other high-risk assets such as Ethereum also gained value. This meek behavior after the Merge was no surprise, given the years of preparation leading up to the change and similar market reactions to earlier platform upgrades.
The story changed this week, though. While stock investors cheered a milder inflation reading than expected, Ethereum was caught up in a crypto scandal as the FTX crypto-trading platform ran out of liquid funds. The FTX meltdown made it difficult for that platform’s users to withdraw or trade their Ethereum holdings, but that’s not all. This crash gave crypto bears more reason to distrust the stability of leading crypto exchanges and, by extension, the financial foundation of cryptocurrencies overall.
Why Ethereum is a no-brainer buy today
In my eyes, cryptocurrencies are about to turn the world of financial services upside down. Encrypted blockchain ledgers enable faster transactions on a global scale, with reliable data security and minimal transaction fees. Ethereum holds a special place in this revolution, as the leading provider of programmable smart contracts.
In the long run, I expect cryptocurrency prices to be closely correlated to the real-world value of the products and services they support. That’s why Ethereum looks like a long-term winner, soaring on the wings of countless decentralized finance developers creating the Ethereum-based apps and services of the future.
Sure, rivals like Solana and Cardano have their own loyal supporters and should find niches to occupy in the blockchain-based financial world. I still expect Ethereum to hang on to its market-leading position, creating a business moat that only grows stronger with time.
I don’t know exactly how high Ethereum’s price chart may fly in the long haul, and anyone who gives you a specific target probably has a nice bridge in New York to sell you, too. But the rising long-term trend is undeniable. Alongside the digital gold of Bitcoin (BTC -1.10%), Ethereum should be one of the first names you think of when investing in long-lasting cryptocurrency names.
So yes, I see a tremendous opportunity to make a great deal of money in the long run if you’re buying Ethereum for less than $1,500 per token today.
Anders Bylund has positions in Bitcoin, Cardano, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Cardano, Ethereum, and Solana. The Motley Fool has a disclosure policy.
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