Is It Too Late To Buy Into Ethereum?

Being in a small but passionate bubble of first adopters, it is important to get the mainstream’s (outsiders) views and opinions about this beautiful crypto-tech and not just news from within the echo-chamber. These post will share that news in hopes to give us deeper perspective so that we can make more informed decisions going forward

Summary:

After months of intense growth, Ether has hit a wall and flatlined.

There's still opportunity for its growth, but also doubt as it works out its future uses; Proof of Stake, EEA, transaction speeds.

Other tokens and coins will influence the price of ETH; and right now is influencing it toward the negative.

Anyone that’s being attentive in the cryptocurrency space lately knows about Ethereum—or its tradable coins, Ether. It’s become a sturdy second-place name after Bitcoin, and though it hasn’t reached the broader popularity of the other (still synonymous with crypto in full), it’s got a large community that’s growing by the day.

And for good reason. In the last three months, ETH is trading at 600% of its early April-price, and was at 10x when ETH approached $400 in late June.

After months of intense growth, however, it’s stabilized and experienced its most significant drop in value (per ETH and market cap) in its entire history.

Yet, new speculative investors are hearing about Ethereum, Bitcoin, and other coins, by the day (one popular trading platform said it had a million new users sign up in June). So, is it too late to hop on and earn from an Ether investment?

No, it’s not.

But I think the days of growth that ETH saw in May and June are not going to be coming anytime soon. The rest of this article will explain why.

For me, it comes down to basics: there are enough people (investors) with enough belief in this technology to be widespread. Companies are part of this optimism; and Ethereum has enough innovation potential that it could be the backbone of technology we use daily. At a current $23 billion market valuation (total sum of its “tokens” and their value), there’s lots of room for growth if it becomes even half of what some think it might.

That’s the upside. And that’s what fueled the ETH rise this year. So why has it gone down?

A few reasons.

The first is Bitcoin itself. Like any younger brother, Ether is going to follow in the footsteps it sees. And so it’s value is tied together closely with Bitcoin—mostly due to investors seeing crypto (and blockchain) as an industry to invest in, not as separate sets of technology.

Bitcoin has seen a uptick in value too (the charts show just how tied these are together)—but it’s dealing with some issues. Its blocks are getting big, “fees” on transactions too high, and a community that is unsure how to scale this amazing technology. It’s too long to go into here, but August 1st represents a big day in the history of Bitcoin. You can read it into here (and much more with a Google search).

With uncertainty hanging over Bitcoin as August 1st approaches, it’s driving down the value of ETH (and really every other coin).

Next part of ETH to understand is the ICO—initial coin offering. If you’ve only heard about Bitcoin and Ethereum, you should know there are now hundreds of coins, each with its own purpose, aim, or back-end tech. One example is something like Siacoin (aiming to disrupt Amazon’s AWS) as a cloud-based storage provider. Doing it over the blockchain could cut costs down significantly.

When these coins (which are almost always an equivalent of a startup company) hit the market they do an ICO—much like an IPO. And there are a ton of them (dozens a month), making a lot of money in these. We’re talking tens—sometimes hundreds—of millions in initial fundraising. Here’s just the most recent one.

So how does this effect ETH? Well, for one, many coins are “based on” Ethereum (more technological involved than I’ll get into here). The other is that to buy these coins, most initial investors are buying with Ether. So, a new company finds themselves with $50m transferred to them for their coins.

They now have enormous expectations to produce value and need capital to start recruiting and building operations. So what do they do? They sell the ETH they’ve collected. And that’s what’s happening now, ETH being pumped back into the market at low(er) prices for companies that have just come into capital.

Lastly, the biggest criteria in Ethereum’s future and value is the technology itself. Think of this as its product—and since it’s not a profitable product yet—it needs to jump into that with ease and trust.

In the coming months, there are a number of large-scale updates and changes to Ethereum’s blockchain capabilities. These will need to be implementing without large disruption or losing the momentum it has, especially with the technical crowd. With so many other coins involved in this space now, competition is tight, even for one as big as Ethereum.

Of course too, it will look to take over Bitcoin as the predominant use-case in crypto economics and it needs to succeed on the technological front to do so. Here’s a non-exhaustive list of the updates coming to Ethereum soon.

Ethereum has been incredibly successful so far in speculation, and Ether tokens have gained enormous value recently because of this.

There might not be the same rocketship growth from this point, but I believe there will be a steady value increase with new technological implementations—much to come after August 1st has passed and the future of Bitcoin comes in a bit clearer.

Still time to buy!

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