Key Points
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Ethereum is part of something that’s more exciting than Shiba Inu’s cute dog mascot.
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As major financial institutions explore blockchain adoption, Ethereum will play a starring role.
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If your investments are keeping you up, consider ways to manage portfolio risk.
- 10 stocks we like better than Ethereum ›
Shiba Inu (CRYPTO: SHIB) is one of several dog-themed cryptocurrencies that came to prominence in the meme coin frenzy of 2021. Meme coins are often based on online jokes or prominent figures and can attract strong communities. They are also highly volatile, speculative, and often lack underlying value or use cases.
Shiba Inu has shown surprising staying power. Six years after its launch, it is still in the top 50 cryptocurrencies by market cap — even if it has fallen a whopping 93% from its all-time high. It also boasts more utility than some of its meme buddies, with a decentralized exchange where users can swap coins and tokens, a wallet, and acceptance by some retailers.
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The trouble is, when it comes to usage and growth potential, both of which underpin long-term value, Shiba Inu is not even in the same league as cryptocurrencies like Ethereum (CRYPTO: ETH). Shiba Inu is like a dirt track on the way to an abandoned farmhouse, while Ethereum is a mega highway leading to a shiny skyscraper.
Rather than criticizing Shiba Inu, it makes more sense to focus on why the next few years could be monumental for Ethereum, which looks undervalued at a recent price of about $2,300. It has fallen by roughly 40% in the past six months, but it has the potential to erase those losses and set new highs.
Ethereum could power mainstream crypto adoption
When I first started writing about cryptocurrency, it was almost inconceivable that Visa or Mastercard might integrate blockchain into their operations or that big names in finance like JPMorgan Chase and Fidelity Investments would launch on-chain investment funds. Today, those things have happened, and there’s more to come.
For example, Nasdaq just got the green light from the Securities and Exchange Commission (SEC) to launch tokenized securities for certain companies. Asset tokenization is a way to record ownership on the blockchain and can apply to anything of value, from stocks to art or real estate. The big advantages are increased accessibility, 24/7 trading, and faster settlement.
Ark Invest, the innovation-focused investment firm, may be a bit wide-eyed when it suggests the tokenization market could grow from $19 billion today to $11 trillion by 2030. Still, if stock exchanges, payment providers, and financial institutions move payments and asset ownership onto the blockchain, cryptocurrencies could start to handle trillions of dollars in assets.
Ethereum, which has a reputation for security and reliability and currently accounts for 55% of all real-world asset tokenization, is in the pole position to benefit from that shift. The volume of transactions could easily skyrocket, alongside transaction fees and, ultimately, Ethereum’s price. Shiba Inu is nowhere to be found in this convergence of crypto and traditional finance.
No investment should keep you up at night
If you are losing sleep over your holdings, it’s probably time to reevaluate your risk level. It is important to build a balanced portfolio with a mix of assets and a risk level you can tolerate. All investments carry risk, and even established cryptocurrencies like Ethereum are a speculative way to build wealth. This is an evolving industry, and all kinds of things, including security breaches, regulatory changes, and alternative technologies, could hamper its development.
Although I am excited about Ethereum’s potential and the ways tokenization could transform the financial industry’s infrastructure, crypto still makes up only about 5% of my total investments. I’m optimistic, but it is early days, and I don’t want my financial well-being to be too dependent on an asset that can tank 20% in a month.
Should you buy stock in Ethereum right now?
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JPMorgan Chase is an advertising partner of Motley Fool Money. Emma Newbery has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum, JPMorgan Chase, Mastercard, and Visa. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.