Ethereum as a Store of Wealth

It wasn’t really that long ago, in early 2017, when Ethereum could be had for around $10 a unit. My, have time changed. In less than a year, the cybercurrency’s value increased all the way up to $1400 before eventually pulling back.

That’s an increase of almost 14,000 percent, which in the world of financial instruments, is simply mind blowing. This is many times what someone could achieve with any other investment in one’s lifetime. With numbers like that, it’s no wonder why so many people became so excited about this asset.

Ethereum’s role as a currency or its role as anything else other than an investment vehicle, or rather, a vehicle for speculation, was completely overwhelmed. While Bitcoin has gotten most of the press during the recent cybercurrency speculation frenzy that we saw in 2017, with Ethereum running in second place in terms of the overall amount invested in it, Ethereum simply blew away Bitcoin as far as the amount it increased in value over this time.

Investments are driven by both supply and demand, but with the tight reins on supply that cybercurrencies like Ethereum are under, this makes big spikes in demand even more powerful. In the end though, it has been the buying pressure itself that has driven this wave, where if there are enough people excited about buying something, the price will rise in accordance.

With this massive volatility, and with such massive profits being delivered, it was just a matter of time before profit taking reversed this momentum in the other direction, and selling momentum can be just as contagious, if not more so.

In a matter of just 10 days in January 2018, the value of Ethereum plummeted from over $1400 to below $1000, although the fall wasn’t quite as large as what happened to Bitcoin, which lost half its value from its peak in December 2017.