Ethereum Has Lost 31% in the Last 2 Months: Buy it Still?

There is a lot of volatility in the crypto market right now. Ethereum, along with other crypto-assets, is fluctuating, preventing investors from making a definitive buying decision.

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I wouldn’t! It’s not the drop in value that is stopping me. It’s because Ethereum (CRYPTO:ETH) might fall much farther than it already has. In a little over two months, this particular crypto has fallen about 31.4%, and that includes a little recovery bout it experienced earlier this month. The cryptocurrency is worth buying, but if you plan on buying the dip, waiting for a while might be prudent.  

The direction the crypto is taking might might it falls further in 2022. Anything below $2,000 would be good, and the drop beyond that point would be a bonus. The crypto market is seeing a lot of volatility right now, and smaller/less-known coins are taking off, leaving giants like Bitcoin and Ethereum behind. And investors shifting capital from Ethereum to other cryptos will only aid the current fall, giving us the chance to buy a deeper dip.

Buying the crypto directly

Buying Ethereum directly and keeping it in your hot or cold wallet allows you full exposure to the volatility that this particular crypto token offers, but it also comes with a few downsides. You can’t keep it in your registered accounts, so you don’t get any tax benefits on this investment.

Still, the upside of holding the crypto directly can be enormous if you buy and sell at the right time. If you had bought into this contrarian asset at its lowest point during the pandemic (March 2020), you could have grown your capital by over 3,000% by November 2021. That’s phenomenal growth for the time period (less than two years).

Buying an Ethereum-focused stock  

HIVE Blockchain (TSXV:HIVE) doesn’t focus solely on Ethereum, but it’s one of the two cryptocurrencies the company mines. It mines both Ethereum and Ethereum Classic (ETC) alongside Bitcoin and has mining operations in Canada as well as Europe (Sweden and Iceland), all using clean energy (hydro and geothermal in the case of Iceland).

The mining operations lean a bit more heavily toward Ethereum because 61% of the company’s current holdings (as of last quarter) were in Ethereum.

From a performance perspective, HIVE Blockchain can be just as incredible as Ethereum itself if bought and sold at the right time. The stock rose about 3,400% during its market crash valuation and its February 2021 peak. That’s less than one year. The reason is Bitcoin, which moves a bit differently compared to Ethereum and offers peaks and falls at different times, which may not be a bad thing considering your investment strategy.

Foolish takeaway

Whether you buy Ethereum directly or a tech stock like HIVE that offers you exposure to that crypto, it might be a good idea to wait a while before making the purchase decision. Both are going downhill, and the pattern is expected to continue for a while.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns and recommends Ethereum.

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