Should Ethereum Be Part of Your Crypto Investment Portfolio?

Key Takeaways

  • Ethereum, the second-largest cryptocurrency, serves as both a digital currency and a decentralized computing platform for various applications.

  • Despite its roller-coaster price history, Ethereum’s potential bright outlook includes upcoming rollouts, improvements in scalability, and its role as the foundation for various financial protocols.

  • While Ethereum offers compelling investment potential, investors should be mindful of its inherent volatility and the risks associated with cryptocurrency investments.

If you’re dipping your toes into the cryptocurrency world and considering the best crypto investment strategies, chances are you’ve come across Ethereum. In fact, you may already be considering how to buy ethereum on eToro, Coinbase or any similar crypto trading platform. You might have at some point asked yourself, is Ethereum dead? This article takes a look at Ethereum and whether it should have a place in your crypto investment portfolio. This does not represent investment recommendations for Ethereum or any other cryptocurrencies. Investors should remember that cryptocurrency investments are inherently volatile and carry a high level of risk.

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Read More: How to Buy Ethereum on eToro

What is Ethereum?

Coming right after Bitcoin, Ethereum is the second-biggest cryptocurrency by market capitalization. It’s more than just a cryptocurrency, though. It’s also a decentralized computing platform that can run a wide variety of applications. Everything from financial tools and games to complex databases are already running on the Ethereum blockchain. Think of it as a digital playground where innovators worldwide gather to create decentralized financial applications. While Bitcoin dominates the crypto market, Ethereum has carved out its own niche, boasting a market capitalization of $208 billion as of June 20, 2023. For many market players, Ethereum is considered to be both money and a store of value. 

A Roller Coaster Price Journey

Ethereum’s price history reads like a thriller, with dizzying highs and heart-pounding drops. It’s weathered crashes of over 70%, 94%, and 80% in the past. However, these turbulent times were also marked by meteoric surges, including a staggering 20,000% increase in 2017. Ethereum isn’t your average investment; it’s a ride of a lifetime.

A Potentially Bright Outlook

Experts think the broader crypto market may remain range-bound in 2023 due to global economic factors like inflation and interest rates. However, Ethereum isn’t staying idle: 

  • Upcoming rollouts like the Holesky testnet due in September 2023 and upgrades like the  Dencun network set to launch by year’s end, promise significant improvements. There is also the potential for reduced gas fees for layer 2 solutions, enhancing scalability and efficiency.
  • Ethereum’s layer-2 ecosystem is gaining strength. Solutions like Arbitrum and Optimism are taking the lead in making transactions faster and more cost-effective. Experts believe these innovations will continue to flourish.
  • The rise of stakeFi protocols suggests that Ethereum is becoming the foundation for stablecoins, automated market makers (AMMs), and real-world assets, expanding its utility.
  • Ethereum’s fee-burning mechanism, introduced in The Merge upgrade, continues to reduce its supply. As Ether becomes scarcer, its value could potentially rise steadily.
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For those considering Ethereum as an investment, it offers a compelling proposition. It’s not just about potential price appreciation, but the broader earning potential of Ethereum’s network. However, while Ethereum’s future looks promising, there are never any fool-proof guarantees. Market shocks or increased regulatory scrutiny could hinder its growth. Every type of trading comes with inherent risk, and investors should never trade with money they cannot afford to lose.

Jeff Sekinger

Jeff Sekinger

Founder & CEO, Nurp LLC

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