Crypto carnage overtook the digital asset market in the month of May, with many cryptocurrency holders losing significant account value. Among the collateral damage was Ethereum (CCC:ETH-USD); this currency necessarily wasn’t the center of attention, but Ethereum investors struggled nonetheless.
More prominent in the financial headlines (as usual) was the mother ship of cryptocurrencies, Bitcoin (CCC:BTC-USD), which garnered the lion’s share of the media’s attention.
And I’ll concede, Bitcoin’s price action was noteworthy in May. Still, I feel it’s worthwhile for investors to pay attention to more than one asset in the crypto-verse.
When we drill down to the essential data, we might just discover that the world’s most popular cryptocurrency isn’t always the most resilient.
Analyzing the Ethereum Price
You might have seen the headline: “Bitcoin is headed toward its worth month since 2011.”
Or, perhaps you’ve seen it mentioned on social media, or even on the mainstream TV news. Crypto crumbled in May; digital fortunes evaporated in an instant.
I love a good hype story as much as anybody, but now it’s time to get serious. Was it really an across-the-board crypto collapse?
- Bitcoin: $57,858 on May 1; $36,791 on May 31 (down 36.4%)
- Ethereum: $2,949 on May 1; $2,602 on May 31 (down 11.8%)
I did a bit of rounding there, but you get the idea. Bitcoin holders got absolutely hammered, while Ethereum bulls were comparatively resilient in May.
Besides, ETH is still having a great 2021 so far. After all, its price was just $731 on Jan. 1.
Moreover, there were some fun times for Ethereum owners in May, as the price touched a 52-week high of $4,362.35 during the month.
And with that, the $4,000 level is likely to remain a battle zone for a while. I imagine that the bulls will prevail, sooner or later.
Ethereum: Higher Utility
A constant debate among cryptocurrency enthusiasts concerns the relative advantages and disadvantages of Bitcoin versus Ethereum.
Sometimes, folks will compare Bitcoin to gold (more popular and pricey) and Ethereum to silver (less popular and pricey, but more utility).
Guggenheim Partners co-founder and former Executive of Investment Todd Morley seemed to emphasize this point when he asserted that “Ethereum, to me, has a much higher utility” than Bitcoin “through smart contracts.”
Analysts at Goldman Sachs also emphasized Ethereum as potentially the more useful crypto asset, at least in one respect.
“Given the importance of real uses in determining the store of value, ether has a high chance of overtaking bitcoin as a dominant store of value,” the Goldman analysts opined.
I also tend to view Ethereum as exceptionally useful — especially now that non-fungible tokens (NFTs), which are largely issued on Ethereum’s blockchain, are particularly popular.
Dwarfing the Giant
Morley didn’t stop there, though. He also observed that “The app developers of ethereum are growing at 20x for the past six years straight” and even concluded, “that’s where the action is.”
For his part, billionaire investor Mark Cuban has been characteristically blunt in his take on the Bitcoin-versus-Ethereum debate.
“I think the applications leveraging smart contracts and extensions on ethereum will dwarf bitcoin,” Cuban recently declared.
It might be difficult to imagine Bitcoin, the giant of the crypto-sphere, getting dwarfed. Yet, Cuban’s defense of his bold statement is worth considering.
“Bitcoin, right now, has evolved to be primarily a store value, and it’s very difficult to use it for anything else … You really have to work a lot harder on bitcoin than you do on ethereum,” Cuban explained.
Ethereum: The Bottom Line
At the end of the day, we don’t have to pit one cryptocurrency against another (though admittedly, it’s a fun mental exercise).
Ethereum isn’t better or worse than any other crypto. It’s just different – though in the month of May, I must say, it proved to be notably resilient.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.