Don’t look now, but after a tough first half of this year, cryptos are quietly staging a rapid and furious comeback from their lows over the previous month and a half—just as many analysts appeared to be writing them off. If you are a new crypto investor eager to get your feet wet in the digital pond after this resurgence in optimism, I’d suggest buying Ethereum (ETH -4.73%).
Momentum returns
Ethereum has risen nearly 97 percent since bottoming at $897 on June 18, owing to the significant market swings that have taken place as a result of investor sentiment.If you’re thinking about whether it’s too late to invest in Ethereum, keep in mind that it’s still down 63% from its all-time high of $4,847, which it achieved last November. Furthermore, if widespread adoption occurs for Ethereum, everyone will probably be “early,” according to experts. Given how volatile cryptocurrencies are on a daily basis, an investor interested in putting money into Ethereum but concerned about jumping in during a run-up may profit from dollar-cost averaging, which has long been used by equity investors to start a smaller position now and then add to it over time rather than investing everything at once.
Coming up on The Merge
The major reason for Ethereum’s recent jump is the pending shift to proof of stake. This transformation, often known as The Merge, is the biggest change to the Ethereum network and its users in years, if not ever. Switching to a proof-of-stake consensus should help solve two of Ethereum’s long-standing problems – high transaction costs and slow transaction speeds. Furthermore, because of this change, more individuals will be able to participate in the ETH network and earn rewards by staking their ether. This essentially means that users will be able to contribute to the security of the network by committing a portion of their Ethereum to validate the transactions in exchange for a share of staking profits. Finally, the transition can assist Ethereum in becoming more environmentally friendly by decreasing its carbon footprint, which has been a common complaint leveled at proof-of-work cryptos over the years.
The foundation of DeFi
Ethereum has a market cap of $208 billion, which vastly eclipses all other cryptocurrencies except for Bitcoin. It was originally released in 2015, long before most of today’s other prominent cryptocurrencies were even conceived. Ethereum is, therefore, the system that underpins much of the current decentralized finance (DeFi) ecosystem. Many other well-known cryptos are ERC-20 tokens based on Ethereum, including Uniswap, USD Coin, and Shiba Inu. Polygon was made as a scaling solution for the Ethereum environment. After a tremendous run this summer, Polygon is now ranked 13th in terms of market capitalization.
Additionally, the significance of Ethereum to DeFi and bitcoin as a whole is underlined by the fact that many other top cryptocurrencies rely on the Ethereum Virtual Machine, which is essentially a middleware layer that enables smart contracts from Ethereum to execute on other blockchains.
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