5 Reasons to Buy Ethereum Before 2030

The world's second-largest cryptocurrency is still a worthwhile investment

Some bullish investors believe Ether still has plenty of upside potential

Image source: Getty Images

We should take those estimates with a grain of salt, since VanEck and Ark Invest are both invested in Ether through their own ETFs

I wouldn't set a firm price target on Ether, but I think it's still worth buying over the next five years for five simple reasons

Its strong developer ecosystem In 2022, Ethereum transitioned from a of-of-work (PoW) mechanism to a more energy-efficient of-of-stake (PoS) mechanism in a sweeping upgrade called "The Merge. " Ether could no longer be mined Bitcoin after that transition

Instead, it needs to be "staked" to earn interest- rewards

But as a PoS blockchain, Ethereum gained the ability to support smart contracts, which are used to develop decentralized apps (dApps), non-fungible tokens (NFTs), tokenized assets, and other crypto assets

That transformation, driven by a growing developer ecosystem that turned Ethereum into the world's largest developer platform for decentralized apps, is now the primary driver of Ether's value, instead of the scarcity of its tokens

Its upcoming network upgrades Ethereum's Layer 1 blockchain is slower than other PoS blockchains Solana and Cardano

To keep up with those speedier competitors, Ethereum hosts Layer 2 solutions which bundle together its transactions and cesses them off-chain at higher speeds before returning them to its L1 blockchain

Over the next few years, Ethereum will go through three more upgrades: The Verge, The Purge, and The Splurge

The Verge will imve Ethereum's scalability without commising its decentralization

The Purge will out its historical data and nical debt to reduce its network congestion and gas fees

The Splurge will vide additional optimizations and minor imvements to ensure its blockchain is running as efficiently as possible

The Ethereum Foundation hasn't set the exact dates for these upgrades yet, but they could draw more developers to its platform, widen its moat against Solana and Cardano, and stabilize Ether's price as it's more widely used in transactions across its blockchain

Increased network activity will reduce its circulating supply Un Bitcoin, which is always deflationary, Ether can be both inflationary and deflationary because it burns (removes from circulation) a portion of each transaction fee

If its network activity increases, it becomes deflationary as it burns more tokens

But if its network activity decreases, it becomes inflationary as more tokens are issued than burned

So if more developers launch dApps, tokens, and other crypto assets on its blockchain, its network activity will rise and reduce its circulating supply

While Ether's value doesn't typically depend on its scarcity, the tighter supply should limit its downside potential during a market downturn

If the SEC apves new Ether ETFs with staking features, those higher-yielding funds could draw in more institutional investors

Big investors BlackRock, Deutsche Bank, Coinbase, and Kraken have already been accumulating more Ether and launching more Ethereum jects

If they ramp up those efforts over the next few years, Ether's price could soar even higher

Declining interest rates will lift the crypto market Finally, declining interest rates could attract investors back to the crypto market

As a "blue chip" cryptocurrency, Ether should attract a lot more attention than the smaller meme coins

Declining interest rates should also weaken the U

That erosion could drive more investors toward Bitcoin and Ether as hedges against inflation and the dollar's devaluation

Those cryptocurrencies will ly remain more volatile than gold, silver, and other physical assets, but they might be a good place to park your cash for the long term if you're worried the dollar's future

Should you invest in Ether right now

It might not replicate those massive gains over the next five years, but investors shouldn't ignore the catalysts that could drive its price a lot higher

I wouldn't go all-in on Ether yet, but I'd be willing to accumulate it as a speculative growth play

Leo Sun has no position in any of the stocks mentioned

The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana

The Motley Fool recommends Coinbase Global

The Motley Fool has a disclosure policy.