Is Ethereum a buy in October?

The long-awaited “merger” has finally introduced proof-of-stake validation and staking to the Ethereum (ETH -0.70%) blockchain network. The massive platform upgrade did not push up Ethereum prices, however. Instead, the Ether token fell 10% that week. It seems like crypto investors have priced every positive element of this event in the digital asset even before it happened.

With the merger in the rearview mirror, is it time to stock up on Ethereum in early October?

We’ll take a look.

Lack of enthusiasm was expected

The indifferent market reaction to the big Ethereum update did not surprise me. This event was planned years in advance. The Beacon Chain, which provides Ethereum’s new proof-of-stake data validation functions, began testing in 2020. The planning stages go back even further. Investors have had plenty of time to factor its effects into the price of the cryptocurrency.

Yes, this was a major platform upgrade. Today, Ethereum runs faster and cheaper, using only 0.05% of electrical power consumed as a proof-of-work system.

However, this is actually just one step in a longer journey. Ethereum co-founder Vitalik Buterin considers the Ethereum blockchain network to be 55% complete post-merger, and the developer community has several important follow-up improvements planned for 2023 and beyond.

The true value-creating qualities of Ethereum

The market value of Ethereum depends on the people actually using the blockchain network. The more Ethereum is used in decentralized finance applications, non-fungible tokens (NFTs), blockchain-based games, and other user situations, the more each token will be worth.

The market is poised for dramatic growth from the current modest level of around 1.2 million transactions per day. Imagine a world where almost all consumers rely on blockchain-based apps for everyday banking and payment options. Ethereum won’t own all the space, but it has a head start on promising alternatives such as Solana and avalanche. Challengers may be faster than Ethereum’s post-merger platform, but they cannot match the developer community of the world’s first and largest smart contract system.

Catalysts of the future

So what is holding Ethereum back today? It’s a combination of factors:

  • Crypto investors are looking for a strong regulatory framework, both in America and abroad. It is difficult to treat an investment seriously when it is not clear how that asset will be taxed, secured or limited in the long term.
  • Mass market adoption is a gradual process. If you build applications based on Ethereum, users will come. Then you build more, attracting even more consumers. Lather, rinse and repeat – again and again.
  • Financial institutions with deep pockets are chomping at the bit to join this exciting market. They expect regulatory clarity and plan their market entry strategies in detail. When the floodgates finally open, Ethereum and other cryptocurrencies are expected to soar.

None of these catalysts are likely to arrive in 2022. There will be baby steps in that direction, including bills going through congressional bureaucracy and banks dipping their toes in the cryptocurrency waters, but there will be no big steps forward. now. People are too busy with inflation issues and rising interest rates to really dig into this new digital asset class.

On the other hand, this delay gives decentralized finance experts time to build and refine their ideas. Meanwhile, cryptocurrencies and blockchain-based accounting systems are slowly seeping into the public consciousness. In this time of learning and building, the market is quietly creating a ton of demand for game-changing Ethereum solutions in the future. Thinking back to the ultimate blockchain explosion in the not-too-distant future, you will remember it as an important calm before the storm. It will be a get-rich-quick blast, years of preparation.

Buy Ethereum now and prepare to hold it for five years

So I don’t think you should hit the “buy” button on Ethereum right away, but I think it’s a good idea to accumulate Ether tokens over time. The big payoff can take a few years, and that’s okay. Investing has always been more of a marathon than a sprint anyway.

Anders Bylund has positions in Ethereum and Solana. The Motley Fool has positions and recommends Avalanche, Ethereum, and Solana. The Motley Fool has a disclosure policy.

Comments are closed.