Is Ethereum a Good Investment? (2025)

Why is Ethereum a good investment?

Many investors see Ethereum as more than just another cryptocurrency. It's the foundation for thousands of decentralized applications, smart contracts, and decentralized finance (DeFi) platforms. 

Here's why many investors believe in Ethereum’s long-term value: 

• Institutional adoption: Spot Ethereum ETFs have attracted billions in capital, with BlackRock's ETHA alone holding over $15 billion in assets. Publicly traded companies now hold 2.7 million ETH in corporate treasuries, treating it like a strategic asset alongside Bitcoin.
• Network effects: As the largest and most popular smart contract blockchain, Ethereum is considered the ‘default’ for decentralized apps. New projects launch on Ethereum because of its established community.
• Staking rewards: Ethereum uses staking to validate transactions, a process that generates passive income for investors. Stakers earn 4-6% annual yields. Today, 30% of the total supply of ETH is locked up in staking. 
• DeFi dominance: Ethereum hosts 63% of all DeFi protocols and over $96 billion in total value locked. If you’re a long-term believer in decentralized finance platforms, you may want to consider investing in Ethereum. 
• Scarcity mechanism: The EIP-1559 upgrade introduced fee burning, removing ETH from circulation with every transaction. This means that Ethereum’s supply can go down with high network usage! 
• Regulatory environment: President Trump has implemented crypto-friendly policies in the United States. In 2025, President Trump announced that ETH and other cryptocurrencies will be held in a crypto strategic reserve. 

Ethereum's market cap currently sits above $300 billion, making it the world’s second-largest cryptocurrency behind Bitcoin. Ethereum processed over $50 billion in DeFi lending by mid-2025, and stablecoin transactions on Ethereum reached $2.82 trillion in October of the same year. 

What is Ethereum?

How does Ethereum work?

Ethereum was originally built in 2014 to serve as a worldwide computer that helps power decentralized applications. Today, Ethereum forms the backbone of some of the world’s most popular DeFi protocols and NFT collections.

Some critics say that Ethereum’s architecture is severely outdated. Today, networks like Solana and Cardano offer faster speeds and lower fees. 

How Ethereum verifies transactions

While Ethereum validates transactions through Proof of Stake (PoS), a system where ‘stakers’ who lock up Ethereum verify transactions. The network now has over 1 million active validators securing more than $100 billion worth of staked ETH.

What is ETH?

ETH is Ethereum's native cryptocurrency. ETH is used to pay transaction fees (called "gas"), interact with apps on the network, and earn staking rewards. 

Investors hold ETH because they believe that if the network becomes more valuable in the future, so will the cryptocurrency.

Unlike many cryptocurrencies, ETH doesn't have a fixed supply cap. However, the network burns a portion of transaction fees, which can make ETH deflationary during periods of high activity.

What are the risks of investing in Ethereum?

Extreme volatility: It’s important to remember that the cryptocurrency market is highly volatile, and ETH is no exception. ETH dropped from $4,878 in November 2021 to around $1,200 by October 2022, a decline of about 75%. 

Competition: Solana, Avalanche, and Base are eating into Ethereum's market share. While Ethereum holds 59% of DeFi capital, newcomers like Base, HyperLiquid, and Sui have collectively amassed over $10 billion in TVL. While Ethereum has been criticized for its slow speeds and high fees, these chains were built to solve these issues. 

Dependency on Layer 2: Ethereum's scaling strategy essentially offloads activity to Layer-2 solutions. While these help the network offer faster speeds, they make transactions more complex and cause Ethereum's base layer to capture less value. Competing networks like Solana do not require Layer-2 solutions to offer fast speeds. 

How does Ethereum compare to competitors?

Ethereum was the world’s first smart contract blockchain. However, newer blockchains offer fierce competition. Let’s compare Ethereum to two of its biggest competitors: Solana and Cardano. 

Ethereum vs. Solana

Solana is a smart contract blockchain that offers speeds up to 3,000-5000 transactions per second (compared to around 15 for Ethereum). Today, Solana is one of Ethereum’s biggest competitors with a market cap over $65 billion. In recent years, Solana has become a popular choice for applications like crypto games that require fast speeds.

Some critics say that Solana sacrifices decentralization for speed. Solana has more than 3,000 validators, compared to more than 1 million for Ethereum. Solana has also been criticized for having more frequent blockchain outages, while Ethereum is considered more reliable. 

Ethereum vs. Cardano

Cardano is a blockchain focused on academic rigor. Cardano's development moves slower because the blockchain prioritizes peer-reviewed research before implementing changes.

Ethereum moves faster and has far more developer activity. While Cardano might be more theoretically sound, Ethereum has built a stronger ecosystem. 

Ethereum's advantages

Ethereum has a first-mover advantage in smart contracts and the deepest liquidity. Even after years of competition from blockchains, Ethereum hosts over $78.1 billion in DeFi TVL and supports 63% of all DeFi protocols. It’s clear that users and developers value Ethereum’s community and strong security. 

Where Ethereum struggles

Base layer transactions on Ethereum remain expensive. Despite ETH reaching new price records, DeFi TVL on Ethereum still sits below its November 2021 peak of $108 billion, suggesting that some capital has permanently moved to competing chains.

Ethereum historical performance

Early days (2015-2016)

Ethereum launched in 2014 through an initial coin offering at around $0.30 per ETH. It was the first smart contract blockchain on the market. 

By June 2016, ETH passed a $1 billion market cap, but then crashed over 45% when one of its biggest applications, The DAO, was hacked for $50 million.

The 2017 bull run

In early 2017, ETH more than doubled after the Enterprise Ethereum Alliance was announced. This organization included companies like Microsoft and JP Morgan that wanted to promote the Ethereum ecosystem for business usage. 

In addition, the ICO (initial coin offerings) boom drove massive demand for ETH since most projects launched on Ethereum. By early 2018, Ethereum reached nearly $1,400.

The rally ended shortly afterwards, as many ICOs turned out to be scams and regulators began to crack down on the practice. 

The 2024-2025 recovery

After a 2021 boom and 2022 crash, Ethereum started to recover in 2024 alongside the rest of the crypto market. Today, Ethereum is the #1 choice for decentralized applications and NFTs. 

The SEC approved Ethereum ETFs in 2024, allowing institutional investors to hold the asset. ETH ETFs now hold over $19 billion in assets at the time of writing. 

In addition, Ethereum rallied as President Trump pushed crypto-friendly policies and announced that ETH would be held in the US government’s crypto strategic reserve. 

When will Ethereum explode?

Making accurate cryptocurrency price predictions is difficult due to the complex nature of supply and demand. 

That said, a few factors could push the price of ETH upwards. 

• Major banks and corporations are continuing to build tokenization projects on Ethereum. 
• The Fusaka upgrade in December 2025 aims to dramatically improve scalability and reduce Layer 2 costs. 
• The Trump Administration has pushed crypto-friendly policies 

How do I buy Ethereum?

Want to invest in ETH? Here’s how you can get started: 

Step 1: Create an account
Create an account on a reputable exchange like Coinbase, Kraken, or Gemini. 

Step 2: Verify your identity
Exchanges require identity verification to comply with anti-money laundering laws. You may be required to upload a photo ID or a selfie. This process typically takes anywhere from a few minutes to 48 hours. 

Step 3: Link a payment method
Now, you’ll be required to connect your bank account or other payment method. This is how you’ll be able to fund your account and purchase ETH and other cryptocurrencies. 

Step 4: Buy Ethereum
Search for ETH, enter how much you want to buy, and confirm the transaction. Start with whatever amount makes sense for your budget, and remember you can buy a fractional amount of ETH as well!  

If you’re a long-term believer in Ethereum, consider dollar-cost averaging (buying a small amount of ETH on a regular basis). While it’s impossible to perfectly time the market, slowly building up your holdings can be a great way to get started investing. 

Conclusion

Ethereum is currently the world’s #1 smart contract blockchain, even after years of competition from alternatives like Solana and Cardano. 

Still, it’s important to remember that Ethereum and other cryptocurrencies are volatile. Never invest more than you can afford to lose, and be prepared for volatility.