The Digital Asset With More Upside Than Bitcoin
Our Top Stock this week isn't a stock at all. But it is an investment you should know about.
Today, we break down Ethereum... one of the biggest cryptocurrencies in the market. It's second only to bitcoin, with a market capitalization of roughly $264 billion (as I write).
We need to talk about Ethereum because we're in a "crypto winter."
The crypto market has been in decline since late last year. And some folks are wondering if the cryptocurrency experiment has failed.
Bitcoin's price has fallen from $120,000 to about $74,000, while Ethereum has been cut in half from its highs last year of around $4,500...
Smart investors know this is when you should be looking for valuable assets on sale...
As I'll explain, Ethereum stands to outpace bitcoin when the crypto market rebounds. That's because it underpins so many real, useful crypto projects.
Whereas bitcoin was designed as a store of value and is known as "digital gold," Ethereum is a decentralized, programmable computing platform.
There's never really been anything like this before. It takes most people some work to get their heads around it. But once you do, it's clear that there's a lot of value there. And the developments in crypto should drive that value higher.
Three Things to Know About Ethereum
The Case for Ethereum Goes Way Beyond Price
Most people look at Ethereum and see a price chart. They see something that went from $4,500 to $2,000 and wonder if the party is over. What they're missing is what Ethereum actually is.
Bitcoin, as noted, is digital gold. It stores value. That's it. Ethereum is a massive network with more than 10,000 "nodes" running around the world. You can think of nodes like individual computers. They execute code, settle smart contracts, and move value on their own... without a bank in the middle.
You can do things like pay for goods and services... lend and borrow money... build and use social media and gaming apps... and even create digital assets like non-fungible tokens ("NFTs")... all with Ethereum's network.
Companies such as BlackRock (BLK), Fidelity, and Franklin Templeton are all building on it. These aren't crypto enthusiasts. These are some of the biggest financial institutions on Eart. And they're adopting Ethereum-based technology.
Other blockchains are building on top of it, too. Coinbase Global (COIN) – the largest publicly traded blockchain company – built its own network to be Ethereum-compatible.
Put simply, Ethereum is the Ford F-150 of blockchains. It just works for everything (in crypto). And right now, in these extreme-fear conditions, it's on sale.
Stablecoins Are a $300 Billion Revolution
In a market famous for 50% sell-offs and meme coins, there's now $300 billion worth of crypto that doesn't move at all.
I'm talking about stablecoins.
Stablecoins are a type of cryptocurrency designed to maintain their value at $1. They're pegged to traditional fiat currencies, commodities, and other financial instruments. And the biggest ones are built on Ethereum.
Overall, the stablecoin market is worth about $300 billion today.
Ethereum helps process stablecoin transactions at lower costs than traditional banks. It also typically takes far less time for a transaction to settle – seconds to minutes versus banks' one to three business days. Plus, stablecoin networks operate 24/7/365. No bank holidays.
Even in this crypto winter, payment-processing giant Stripe reported that stablecoin payment volume doubled last year to around $400 billion.
Last July, Congress passed the GENIUS Act. It stands for Guiding and Establishing National Innovation for U.S. Stablecoins... and essentially blesses the integration of regulated stablecoins into the traditional financial system.
The Digital Asset Market Clarity (or just "CLARITY") Act is next. As the name suggests, it aims to clarify the roles of the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission in regards to regulating digital assets.
If it passes, it will be Ethereum's "PayPal" moment.
When PayPal was acquired by eBay (EBAY) in 2002, it didn't just make transactions more convenient. It unlocked a new wave of transactions that couldn't have happened before. Prior to the acquisition, payments were mostly made via check or money order.
The same thing is coming for Ethereum. If CLARITY passes, stablecoin payments volume could take off more than it already has. And Ethereum could see a surge in activity, too, as it hosts roughly 60% of the total supply of stablecoins.
Even if you think stablecoins are something you personally wouldn't see in your everyday life, they're becoming much more common.
Big banks are already using them to help process transactions. In many cases, it's happening quietly in the background, without you even knowing it.
Ethereum Can Get Squeezed Upward on Both Sides
Now, you do have to own Ethereum's native token – ETH – to use the network. Every stablecoin transaction and every tokenized Treasury trade requires "gas." That's the fee paid in ETH to make transactions on the network.
As transaction volumes for stablecoins and other projects grow, it should increase demand for ETH.
At the same time, supply is shrinking. Every transaction burns a small amount of ETH permanently. Only 120 million Ethereum tokens exist – and that number is designed to fall.
Our in-house crypto expert Eric Wade sees Ethereum rising from $2,000 to $10,000 within a year or two.
That's phenomenal upside. But it's also very important to remember that cryptos are risky and speculative. When investing in them, you should size them like a speculative tech stock (or even smaller).
Watch to Learn More
To learn more about Ethereum, check out today's Top Stocks video. Eric and I dive further into what Ethereum enables users to do on the blockchain and the prospects for its price as an investment.
You can watch the entire episode on our YouTube page by clicking the image above. Be sure to like and subscribe to get more of our videos.
Straight to the Source
- Ethereum's price, volume, and market cap at CoinMarketCap.com
- A list of all Ethereum exchange-traded funds in the U.S.
Until next week,
Matt Weinschenk
Publisher and Director of Research
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