Ethereum (ETHUSD) is the second largest cryptocurrency in the world, valued at a market cap of $318 billion. The ETH token was launched 10 years back at a price of $0.31 per coin. At the time of writing, ETH is priced at $2,669, as it trades almost 45% below all-time highs.
Let’s see if it makes sense to invest in this digital asset right now.
An Overview of Ethereum
Ethereum is a decentralized platform for building decentralized applications and smart contracts. The ETH cryptocurrency allows users to transact the token without the need for a central authority or regulator.
Unlike Bitcoin (BTCUSD), Ethereum’s blockchain can be programmed for several use cases. For example, it can be used to build apps, facilitate financial transactions, or hold assets. Basically, ETH is the native cryptocurrency of the blockchain network, which is used to expand and secure the network.
Why Should You Invest in Ethereum?
The cryptocurrency industry is quite nascent and non-regulated, making it a high-risk investment for most individuals. While there are more than 20,000 cryptocurrencies in circulation, just a handful of them are likely to survive and gain adoption over time. Given these factors, it makes sense for investors to gain exposure to large cryptocurrencies, such as Ethereum, that already have gained massive traction among users.
Ethereum has a widening ecosystem, and leads the decentralized finance segment. Today, the DeFi market is worth $80 billion, with Ethereum at the epicenter of this disruption, as it supports over 50% of the market.
Several other blockchain networks, including Solana (SOLUSD), are eying a slice of the DeFi pie, given the high transaction fees associated with ETH. However, in recent years, the introduction of Layer 2 blockchain solutions such as Polygon (MATICUS), Optimism (OPETH), and Base have successfully leveraged Ethereum’s decentralized networking capabilities to provide lower-cost transactions at speed, thereby extending the reach of the blockchain network.
Another tailwind for Ethereum is the launch of spot exchange-traded funds, or ETFs. A spot ETF allows investors to gain exposure to the performance of the underlying asset class (Ethereum) without actually owning the asset. So, you don’t have to worry about setting up an account on a crypto exchange or purchasing hardware wallets.
Additionally, the ETFs are bound to attract institutional investors looking for diversification, driving ETH prices higher.
Invest in these Ethereum ETFs
These spot ETFs were launched on July 23, after which cryptocurrencies have moved significantly lower due to a slew of macro headwinds.
On the other hand, the ongoing volatility allows you to buy the dip in the second-largest cryptocurrency in the world.
Investors looking to add some exposure to Ethereum can consider investing in some of the leading spot ETFs, such as:
1. ProShares Ether Strategy ETF:
With $76.27 million in assets under management (AUM), the ProShares Ether Strategy ETF (EETH) has an expense ratio of 0.95% and an average trading volume around 147,000.
2. VanEck Ethereum Strategy ETF
With $24.39 million in AUM, the VanEck Ethereum Strategy ETF (EFUT) has a total expense ratio of 0.66% and an average trading volume of 32,395.
3. Bitwise Ethereum Strategy ETF
With $9.5 million in net assets, the Bitwise Ethereum Strategy ETF (AETH) has an expense ratio of 0.85%. It also offers investors a total yield of 2.9%, which includes dividends and interest payments.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
