Ethereum: Buy, sell or hold?

Last week, there was a blame game going on with everyone pointing fingers. Is it currently a better time to buy, sell, or hold off on Ethereum (CCC:ETH-USD), a cryptocurrency asset? Let’s examine the events that are occurring both on and off the coin’s price chart, and then provide a risk-adjusted conclusion that is consistent with those conclusions.

If your e-Trade account is still powered by AOL’s browser and dial-up internet, investors are definitely aware of the sharp decline in Bitcoin (CCC:BTC-USD) that occurred last week. The largest digital asset in terms of size completely collapsed, decisively bringing its valuation back below $1 trillion and closer to $700 billion.

However, the selloff in ETH, the second-largest digital asset in the cryptocurrency market, proved more disastrous for many of today’s cryptocurrency investors—or rather, for those who were committed to going too far in Ethereum’s momentum play.

ETH is the second-biggest coin in the cryptocurrency market, with a market capitalization of about $275 billion. Naturally, Ethereum will still need some time to catch up to Bitcoin’s far higher worth. However, the astounding 200% gain this year and the roughly 10-fold increase in BTC’s performance are noteworthy.

More impressive? The increase in Ethereum’s value comes after a more significant 60% decline in price from the top in May.

Ethereum’s Short-Term Blinders and Drivers

What gives with ETH, then? Several variables drove the price action last week, which may have surprised the pessimistic majority. The Chinese government hinted at a crackdown on the usage of cryptocurrencies by financial institutions. The news was without a doubt the biggest source of headaches for digital assets of all shapes and sizes last week.

Concerns about potential U.S. governmental action in the wake of the Colonial pipeline extortion and ransom-taking criminals who are all too willing to accept non-traceable cryptocurrency as payment were other factors that hindered Ethereum and other cryptocurrencies.

Furthermore, news from Tesla (NASDAQ:TSLA) was unhelpful. Elon Musk, the company’s front man, has promised to stop accepting Bitcoin as payment because of the cryptocurrency’s well-known carbon footprint. Notoriety has it that maintaining the BTC blockchain uses more energy than Sweden uses in a year. Ethereum still uses as much electricity as Romania, although it is currently less of a grid hog.

Not to be forgotten in relation to Elon Musk is Dogecoin (CCC:DOGE-USD) and its canary-like warning to the broader cryptocurrency market. Even though the meme cryptocurrency started out as a joke and is still mostly jokes, its valuation is an astounding $43 billion. Furthermore, Elon Musk has been acting foolishly as the highly speculative coin’s unapologetically constant and brazen tweeting emcee.

In summary, DOGE refers to the kind of wild speculative excess that frequently retaliates when the market narrative becomes less positive. However, it seems more likely than not that ETH’s finest days are still ahead of it.

Sorting the Wheat from the Chaff at ETH

Ethereum stands out in terms of increasing utility value for decentralized finance (DeFi) applications thanks to its superior blockchain ledger technology. Indeed, while a millionaire touts adorable DOGE memes on Twitter, prominent investor and businessman Mark Cuban attributes ETH’s superior functionality and smart contracts to the cryptocurrency, which will eventually eclipse the use of Bitcoin.

Without the need for memes or emoticons, Cuban’s opinions speak for themselves. Additionally, there is more reason for ETH investors to be optimistic as Ethereum switches from its energy-intensive “proof of work” system to a different “proof of stake” system, which has the potential to cut its energy usage by up to 99.95%. And there’s more.

Another major factor supporting Ethereum is the rapidly expanding unique non-fungible tokens, or NFTs, that make use of ETH’s technology. NFTs are, in a loose sense, distinct digital properties made up of music, video, and other media kept on the Ethereum digital ledger. Consider digital artwork.

The greater the demand for Ether tokens, the more popular NFTs become. And it’s taking place right now. It’s no surprise that 2021 has been successful for ETH investors given that big names in the industry, like the NBA and the New York Stock Exchange, have joined in on the action by selling NFT trading cards and celebrated initial public offerings (IPOs). Investors have also taken to the digital space, liking what they see and already paying upward of tens of millions of dollars for those rights.