Why would a cryptocurrency enthusiast invest in Ethereum? There are plenty of reasons for and against, but one of the unique negatives is getting a lot of attention. That downside of the popular coin is related to its ownership distribution. The good news is that there are many Ethereum trading opportunities for those in search of alternatives to Bitcoin, traditional stocks, commodities, and precious metals. Aside from that unique factor, what are the other pros and cons of investing in ETH and what are some key facts that prospective ETH owners should know? Here’s a quick summary of all the relevant data.
Ownership Distribution is a Problem
No other form of non-traditional currency faces the ownership distribution problem that Ethereum does. In fact, if the coin has one major downside, it’s the fact that fewer than 400 individuals own more than a third of all circulating units. Why is that bad? There are dozens of reasons that concentrated ownership by a few big-wigs, or whales in the cryptocurrency universe, means trouble for everyday investors. For starters, when so few people control such a huge chunk of the company’s total assets, there’s a very real danger of price manipulation.
But even in the absence of ill will or evil intentions, all it takes if for a few of these whales to sell their holdings and the coin’s price could shoot up or down on a moment’s notice. No one who invests wants to deal with volatility, especially if the massive price changes are totally unanticipated. Whales pose a problem for prospective Ethereum owners and are unique to the second-biggest cryptocurrency.
ETH is the Second-Biggest Crypto in the World
If you’re searching for a Bitcoin alternative, Ethereum is the next biggest member of the cryptocurrency club, standing as a distant second-place to BTC with a $218 billion capitalization, a March 2021 price of $1,900, and with about 115 million units currently in circulation. In terms of market-cap, ETH is about one-fifth the size of niche leader BTC. However, from an investor’s or trader’s perspective, that means there is not a problem with liquidity, as the coin is one of the market’s major participants. And with Bitcoin’s recent widespread acceptance an upward value swings, this market’s second-fiddle stands to benefit from a wider public acceptance of virtual money.
Pro: Reasonable Cost Per Coin
Even with the whale problem, ETH still has a lot going for it. First on the list of pros is the coin’s reasonable cost. Look at it this way, if you own one or more BTC units and prices drop by 20 percent, you’re dealing with a financial catastrophe. For ETH and most of the other lower-priced cryptos, this scale of risk is not an issue.
As of mid-March 2021, Ethereum’s unit price is $1,901, far below BTC’s shocking unit price of $60,000. Another pro of having a reasonable price range is that it’s easier to do technical analysis on price charts. When a virtual form of currency like Bitcoin changes in value so drastically over a short period of time, there’s nearly no meaning in technical indicators like moving averages and value divergences, let alone relative strength calculations. With virtual currencies priced near or below the cost of an ounce of gold, it’s much easier to do statistical analysis that makes sense. Charting and graphing for gold, silver, and the non-Bitcoin crypto-currencies is a worthwhile, rewarding effort.
Pro and Con: Not Well-Known
Ask anyone on the street to name a cryptocurrency and of the ones who can give an answer, you’ll hear Bitcoin likely nearly every time. There’s a good reason for that, and it’s clearly the financial media. The networks love to report on Bitcoin’s most recent highs, lows, and corporate celebrities who have jumped on the virtual currency bandwagon. Left out of nearly all this reporting is the fact that other kinds of alternative money exist.
But there’s another thing about being unknown in that for investors who have heard of ETH, the opportunities are plentiful. Not only can you take part in buying and selling a crypto-coin that is not manipulated by media reporting, but you have the chance to transact business in a newer form of virtual money that still has a lot of room to grow. Being not very well-known acts as both a pro and a con, depending on who you are. If you’re an investor who understands that everything has its good and bad sides, the fact that ETH is not so well known can be a big plus.