Ethereum (CCC:ETH-USD) is one of the top names when it comes to cryptocurrency. Ether is the native currency of the Ethereum blockchain. However, these words are used interchangeably.
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Some who don’t have the means to buy an entire Bitcoin (CCC:BTC-USD) instead invest in Ether without a second thought. Numerous crypto analysts believe that Ethereum is one of the best blockchain currencies to invest in and that it will surpass Bitcoin in the future.
Well, I don’t agree with them. Every token has its pros and cons, but I believe that the cons of Ethereum surpass its pros. It’s important to be careful before investing in it. Before I give my view on Ethereum, let’s have a look at the reasons why Ethereum is so well known.
Why Is Ethereum So Famous?
Bitcoin was first launched in 2009. After that, many cryptocurrencies were launched but most of them were unable to survive. However, when Ethereum was launched in 2015, it was able to compete with Bitcoin because of its unique characteristics. One of them is that it provides a great platform for developers.
Now, Ethereum is the second most valuable digital token by market capitalization. Right now, Ether stands at $3,750. Though the price of one Ether is quite small compared to Bitcoin, it still manages to stand in the second position.
Many crypto experts are assuming that this value will grow exponentially in 2022. But before you start investing in the token, you should learn about the negative aspects of Ethereum. After all, not all blockchain experts are in favor of Ethereum.
Bearish View on Ethereum
When the year 2021 began, many experts believed that Ethereum would hit the $6,500 mark by the end of the year and would go even higher in early 2022.
Well, the first prediction turns out wrong so the second one may fail as well.
Let’s talk about the decrease in Ethereum’s value in the last week of 2021.
On Dec. 26, Ethereum stood at $4,100, which was a good sign for Ether investors. But soon after that, it kept on falling. It reached a low of under $3,600 on Dec. 29.
Now let’s have a look at its history. In January 2018, this coin was standing at $1,000, but in just two months it was down to under $400. What a huge downfall! This price was only good enough for people who bought it for a few dollars or cents, not for those who invested thousands in it.
However, Ethereum made a strong comeback in 2020.
There are obvious similarities between both situations. It went down not by a few cents but by a huge amount within the blink of an eye.
Final Thoughts
The world of trading digital coins is unpredictable. One moment you think you’re rich, but the next moment you’re close to bankruptcy. So you should know the exact steps to follow before investing in any coin.
If you are new to this game, you should follow the experts in the league who can tell you the best time to purchase and sell your coins. Otherwise, you may fall behind in the crypto race.
On the date of publication, Stavros Georgiadis, CFA 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.
Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com/. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.