Ethereum Has Lost 31% in the Last 2 Months: Buy it Still?

There is a lot of volatility in the crypto market right now. Ethereum, along with other crypto-assets, is fluctuating, preventing investors from making a definitive buying decision.

| More on:
cryptocurrency, crypto, blockchain

Image source: Getty Images

I wouldn’t! It’s not the drop in value that is stopping me. It’s because Ethereum (CRYPTO:ETH) might fall much farther than it already has. In a little over two months, this particular crypto has fallen about 31.4%, and that includes a little recovery bout it experienced earlier this month. The cryptocurrency is worth buying, but if you plan on buying the dip, waiting for a while might be prudent.  

The direction the crypto is taking might might it falls further in 2022. Anything below $2,000 would be good, and the drop beyond that point would be a bonus. The crypto market is seeing a lot of volatility right now, and smaller/less-known coins are taking off, leaving giants like Bitcoin and Ethereum behind. And investors shifting capital from Ethereum to other cryptos will only aid the current fall, giving us the chance to buy a deeper dip.

Buying the crypto directly

Buying Ethereum directly and keeping it in your hot or cold wallet allows you full exposure to the volatility that this particular crypto token offers, but it also comes with a few downsides. You can’t keep it in your registered accounts, so you don’t get any tax benefits on this investment.

Still, the upside of holding the crypto directly can be enormous if you buy and sell at the right time. If you had bought into this contrarian asset at its lowest point during the pandemic (March 2020), you could have grown your capital by over 3,000% by November 2021. That’s phenomenal growth for the time period (less than two years).

Buying an Ethereum-focused stock  

HIVE Blockchain (TSXV:HIVE) doesn’t focus solely on Ethereum, but it’s one of the two cryptocurrencies the company mines. It mines both Ethereum and Ethereum Classic (ETC) alongside Bitcoin and has mining operations in Canada as well as Europe (Sweden and Iceland), all using clean energy (hydro and geothermal in the case of Iceland).

The mining operations lean a bit more heavily toward Ethereum because 61% of the company’s current holdings (as of last quarter) were in Ethereum.

From a performance perspective, HIVE Blockchain can be just as incredible as Ethereum itself if bought and sold at the right time. The stock rose about 3,400% during its market crash valuation and its February 2021 peak. That’s less than one year. The reason is Bitcoin, which moves a bit differently compared to Ethereum and offers peaks and falls at different times, which may not be a bad thing considering your investment strategy.

Foolish takeaway

Whether you buy Ethereum directly or a tech stock like HIVE that offers you exposure to that crypto, it might be a good idea to wait a while before making the purchase decision. Both are going downhill, and the pattern is expected to continue for a while.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns and recommends Ethereum.

More on Tech Stocks

a-developer-typing-lines-of-ai-code-while-viewing-multiple-computer-monitors
Tech Stocks

Could Constellation Software Become the Next Berkshire Hathaway?

Constellation Software's (TSX:CSU) capital-allocation strategy is similar to that of Berkshire Hathaway (NYSE:BRK.B).

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy With $1,000 Right Now

These three Canadian tech stocks could be among the best growth opportunities in the market right now.

Read more »

happy woman throws cash
Tech Stocks

3 Growth Stocks That Could Be Long-Term Wealth Creators

These three growth stocks aim to grow their financials at a higher rate than the industry average, thus delivering superior…

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is POET Technologies a Top AI Stock for Canadian Investors?

Canada has relatively few AI stocks, and the ones it has are different from American AI stocks in terms of…

Read more »

Rocket lift off through the clouds
Tech Stocks

2 Growth Stocks That Could Skyrocket in 2025 and Beyond

Wondering what types of stocks could rapidly rise in 2025? Check out these two stocks with substantial upside if they…

Read more »

up arrow on wooden blocks
Tech Stocks

The 3 Smartest Tech Stocks to Buy With $500 Right Now

Tech stocks can be seen as a bit risky, but these three have far less risk and more stability for…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Tech Stocks

Shopify: A Must-Have Growth Stock for Your TFSA Now (and the Next 10 Years)

Shopify (TSX:SHOP) stock isn't just a top growth company, it's a titan worth owning in your decades-long TFSA fund.

Read more »

cloud computing
Tech Stocks

Best Stock to Buy Right Now: Manulife vs CIBC

Want the best stocks? These two are certainly the best options. But which is the better buy?

Read more »