Another parallel universe in the investment world became mainstream during 2024, crypto world with its ETF’s.
This specific crypto is like the greatest tech stock the world has ever known. I believe it’s set to outperform the vast majority of other cryptos over the next few years.
No, it’s not bitcoin (BTC).
Bitcoin was the first to use of blockchain technology. Think of blockchain like a database. It’s a tool for recording and verifying transactions and asset ownership. Using blockchain technology, bitcoin allowed anyone to send and receive money on the internet without banks or any other financial middlemen—for the first time ever.
Despite this, hardly anyone uses bitcoin to actually ‘buy’ things today. Instead, bitcoin’s blockchain is like a database. That database can be used for many things. But it’s used for one thing and one thing only: keeping track of who owns bitcoin.
I’m talking about Ethereum (ETH).
#1: ETH is considered a flight to safety
In 2022, the crypto market went through a major culling when fraudulent crypto exchange FTX collapsed and high-profile stablecoins (like USD and LUNA, the crypto it was tied to) crashed in value. This led to a wave of selloffs and a loss in investor confidence. Many turned their backs on crypto, never to return.
But those who stuck around are likely to put money to work in dominant cryptos with solid fundamentals, like Ethereum.
A similar trend played out in past crypto downturns. Bitcoin as a percentage of crypto’s total market value doubled during the last bear market. And I believe ETH will replace BTC as the go-to crypto asset moving forward.
#2: Fewer sellers, more buyers
Ethereum switched to “staking” in September 2022 and now boasts some of the best tokenomics of any crypto. Since the big switch, the effects on its supply schedule have been astounding. There have been fewer sellers and more buyers. Today, you can earn around a 3%–4% yield staking your ETH. That’s a big incentive for crypto investors. What’s not to like about getting paid to hold ETH?
Ethereum’s “burn” mechanism is comparable to companies buying back their own stock. It reduces the supply of ETH … and should result in higher ETH prices.
#3 The ETFs have arrived
Crypto achieved a major milestone when bitcoin ETFs got the green light to start trading at the beginning of 2024.
In just two months after their launch, $60 billion worth of investor money poured into these funds. The world’s largest asset managers—including BlackRock, Fidelity, VanEck, and others—are now telling their clients to buy and hold BTC and ETH in their 401(k)s.
More important, Ethereum is only about one-fourth the size of bitcoin. That means it takes less money to move its price. Even if Ethereum attracts 20% of the inflows bitcoin got, logic says that when billions of dollars start flowing into ETH, its price will rise.
For these reasons, I recommend heavily skewing your crypto portfolio toward ETH.
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