Cryptocurrency has been judged as a speculative asset that can lose its valuation by 20% within just a day. For that same reason, many traditional investors refuse to put their money in cryptocurrencies. Even when they do, they won’t put more than just a few percentages of their wealth due to the risks that crypto possesses.
Ethereum, as the second-largest cryptocurrency on the market, has been facing the same stereotype and prejudices in the public eye. It has been seen as one of the most speculative assets on the planet, with price action that tightly follows Bitcoin’s price. So, is Ethereum a good investment in 2020?
Cryptocurrency As A Hedge Against Traditional Investments
For so many years, the narrative about cryptocurrency has always been about the hedge against the inflation of fiat currencies. Satoshi Nakamoto, the creator of Bitcoin, said that central banks have debased and breached the trust of fiat currencies over and over again. For this reason, cryptocurrency had always been seen as the anti-fiat or (at least) as the alternative to the standard currencies.
Typically, millennials who like to trade and invest in cryptocurrencies are not that interested in the stock market and other traditional investments. There are plenty of millennials who love and trade crypto all the time and yet they do not actually learn anything about stock or even real estate market. As you can see, cryptocurrency has successfully become an alternative investment group compared to traditional investments.
Ethereum and Crypto Space In The Era Of Global Pandemic
2020, particularly, is an interesting year. Unlike the previous years, when the world and stock market were profitable, 2020 has proven to be a very different year due to the global coronavirus pandemic. Stock market and many developing countries’ fiat currencies have been losing value. And the world fears for even deeper crisis as more countries force national lockdowns here and there.
Surprisingly (or not), Ethereum and the crypto space has been very “resilient” in 2020. Although huge sell-offs in February until early March, the crypto market had slowly recovered. Bitcoin alone was able to recover from below $6000 to $7000 within just one month (from March to April 2020). This is quite different from many mainstream industries where they kept losing value from time to time, especially when a lockdown is forced into place in many major countries.
The narrative “work from home” or “stay at your home” is also becoming increasingly common all over the world. And this narrative might not be very efficient for many mainstream businesses even though they have no other choice. To “flatten the curve,” they must practice massive social distancing. In crypto space, social distancing or work from home is already something that naturally built-in. Many crypto companies already work remotely, or at least part of the team already works remotely from the very beginning.
And the fact that the whole industry does not involve any good physical delivery, the crypto space has huge potential to become one of the industries that will grow quite fast in the era of global coronavirus fears.
So, Is Ethereum A Good Investment In 2020?
With global coronavirus fears become worse and worse by the day, it will be a huge test for cryptocurrency space to prove its point as a hedge against the global financial crisis. Remember that Bitcoin itself was first created after 2008’s global crisis.
Ethereum, as one of the leaders of crypto space, also has a lot of points to prove. If Ethereum and other cryptocurrencies can prove themselves as a good alternative investment in 2020 (in the era of coronavirus pandemic), more people would take the crypto space much more seriously. Remember that many people out there still see Ethereum and other cryptocurrencies as jokes or gambling. If Ethereum can rise when traditional investments go down in 2020, it will be seen differently.
So, is Ethereum a good investment in 2020? Only time will be able to tell. With uncertainties due to coronavirus impact on the global economy, there are actually some scenarios that might play out.
One of the scenarios is that there will be more and more people who put their money into crypto because they will finally see more devaluation of the dollar and other fiat currencies. In this case, Ethereum would be a good investment in 2020 and also in the upcoming years. But, in the case of people who prioritize cash over any other thing, the fear is that there will be many people who also pull out their investments from crypto.
Either way, it is interesting to see where Ethereum will be as a vehicle of investment. We can’t pretend to be experts in this case because (let’s face it) nobody knows what is going to happen to our economy after the end of coronavirus pandemic. But, once again, so far, the crypto space (including Ethereum) has proven itself to be one of the resilient industries during the time of coronavirus lockdown.