Should You Buy Ethereum While It’s Below $3,500?

On January 20, 2025By Littum

From 16 January it is Ethereum (CRYPTO: ETH) cryptocurrency had gained 37% in a year. However, it was a wild ride along the way, with coin prices ranging between $2,220 and $4,070. All in all, the second biggest name in crypto barely managed to outshine a star-studded showing S&P 500 stock market index in the same period.

Ethereum is worth about $3,333 per coin as of this morning. I love alliteration and repetitive patterns, but cryptocurrency won’t stay at this appealing price for long. (Actually, it’s already moved since I wrote that price down — it’s hard to keep up with these volatiles digital assets.)

But none of that matters if you’re considering becoming an Ethereum owner. What does is whether the smart contract platform is ready to move higher or whether it peaked 10 months ago.

Ethereum has been worth more than $3,500 several times before. It reached that level on at least seven occasions in 2024 and briefly topped $4,000 in May and December. These spikes didn’t even set records — Ethereum’s all-time high was a brief visit to $4,892 in November 2021.

A simplistic review of the cryptocurrency’s price chart suggests that it is tracking the four-year cycle Bitcoin (CRYPTO: BTC) halving events. Ethereum prices tend to rise about a year after each Bitcoin halving, skyrocket for another year or so, and then fall back in the middle of a crypto winter. If the market will repeat this pattern, then Ethereum and other cryptos, timing-wise, are at the beginning of a new bull market.

However, there are many problems with this analysis of the chart.

As with stocks, Ethereum’s past performance is no guarantee of its future performance.
Each Bitcoin halving cycle has been different from those that preceded it, and this one is no exception. Several price-boosting events impacted Ethereum last year, perhaps undermining its potential for short-term gains in 2025.
Ethereum has a fairly short chart history to look at. This is only the third crypto market cycle since Ethereum was introduced in 2014. Perhaps investors should not draw conclusions based on this limited pool of data.
Which brings me back to the first point – chart curlers from the past can’t really tell you what’s next. Technical analysis is neither an art nor a science, but more of a game of chance. I do not recommend making investment decisions on such a flimsy premise.

Let’s forget the price chart for a minute. What is really going on in the Ethereum project and what could it mean for owners, users and investors in the long run?

Both Bitcoin and Ethereum are essentially encrypted transaction ledgers that are managed on publicly available computer networks. But they serve fundamentally different purposes.

Bitcoin offers a digital coin that can be used for payments, and its value should increase over time due to increasing demand and a strictly limited supply.

Ethereum is the functional coin of a massive, global computer. Smart contracts embedded in its transactions are executed automatically and perform a wide range of digital functions based on real-world data. This functionality is at the heart of decentralized finance (DeFi) systems, which move financial processes out of banks and into your smartphone.

As such, the coin’s value is not subject to tight supply constraints. It’s about the smart contracts finding many use cases, millions of daily users and a massive amount of actual Ethereum transactions. Each transaction causes something to happen in someone’s blockchain wallet, or in a decentralized game and so on – and the transactions incur gas fees. Some of the tokens used to pay these fees are “burned” – permanently removed from circulation. The rest goes to holders who stake their Ethereum coins, allowing them to validate transactions on the blockchain and keep it secure. Importantly, you can pay extra gas fees to execute your smart contracts faster, which should result in significant price increases as Ethereum-based apps become mainstream.

Furthermore, Ethereum is always upgrading its software. Upcoming improvements include tighter security, changes that should lead to cheaper transaction fees, and technical foundations for game-changing upgrades later. These boosts will be necessary to fend off challenges from younger and faster smart contract platforms. It would be a shame to build a worldwide market for decentralized apps, just to watch Solana (CRYPTO: SOL) and Cardano (CRYPTO: ADA) reap all the long-term benefits of your work.

What’s missing from this overview is a timetable for decentralized finance apps to take off. With or without the assistance of Bitcoin’s tenor-dictating price trends, Ethereum’s real value won’t become clear until we see the first killer apps from the DeFi and Web3 movements.

Determining a proper value on a digital transaction tracking network is difficult, especially in a rapidly changing market that includes multiple credible alternatives.

That said, I am convinced that DeFi and Web3 will revolutionize personal finance across the globe. Disrupting the vast banking sector will be a heavy lift, but it may also be inevitable. The financial systems you use every day in 2025 have been around for decades or even centuries, and there are better tools available these days.

And despite a host of challengers, Ethereum remains the leader of the smart contract pack. Many signs point to a healthy user community. More than half of all crypto value locked in app development projects belongs to the Ethereum market. There are about 300 million active Ethereum addresses, up from 130 million four years ago.

The network effect of this rapidly growing user group should increase Ethereum’s value over time. According to Metcalfe’s law, the value of any network grows in proportion to the square of the number of people involved. This value formula was originally applied to telecommunications networks in the 1980s, but has also been applied to the Internet, social networks, airport networks, and financial services.

On that note, I expect Ethereum’s real-world value to increase as more people embrace its quick and cheap solutions to age-old financial problems. I can’t promise that $3,333 is the best buy-in price ever; still I see a bright future for this crypto community in the long run and the coin should build value over the years.

Ethereum may or may not skyrocket in 2025, but that doesn’t really matter. I suggest you hold this cryptocurrency for a long time.

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Anders Bylund has positions in Bitcoin, Cardano, Ethereum and Solana. The Motley Fool has positions in and recommends Bitcoin, Cardano, Ethereum and Solana. The Motley Fool has one disclosure policy.

Should You Buy Ethereum While It’s Below $3,500? was originally published by The Motley Fool