Ethereum Dropped More Than 30% in February. Is It Worth Buying the Dip?

All of that, of course, is important if Ethereum is going to play a key role in future DeFi initiatives. Overall speed and throughput capacity are paramount for DeFi, so the faster and more efficient Ethereum becomes, the more dominant it should be.

So far, everything sounds great, right? Ethereum is clearly in the good graces of the Trump administration, and it continues to improve in terms of overall blockchain performance.

However, it’s not quite that simple.

For one, there’s currently a tremendous amount of debate over whether Ethereum has the optimal strategy for future growth. Things have gotten so contentious, in fact, that there has been a shakeup at the Ethereum Foundation, which helps to manage the growth and development of Ethereum. And top developers at Ethereum have been squabbling over the best approach to the blockchain’s technical development.

What’s more, the competition seems to have caught up with Ethereum. Other Layer 1 blockchains — such as Solana and Cardano — represent a huge competitive threat. In general, they are faster and more efficient than Ethereum, and that makes them more attractive to both users and developers. In the area of DeFi, Solana has emerged as a formidable rival.

Both Solana and Cardano have also caught the eye of the Trump administration. As Trump announced on March 2, it’s not just Ethereum that may be added to the crypto strategic reserve — Solana and Cardano are also in the discussion. That could make it difficult for Ethereum to put distance between itself and the competition.

At a current price of $2,370, Ethereum is a whopping 51% below its all-time high of $4,892 set back in November 2021. Theoretically, if Trump is able to ignite a rally in the crypto market, Ethereum could reclaim its all-time high. So you might make 50% on your investment this year. That’s not too shabby.

But things are less certain over the long haul. You need to have rock-solid conviction that Ethereum will continue to be the top Layer 1 blockchain in the world. If you do, then it is definitely worth buying the dip on such an undervalued digital asset. However, if you don’t, now might be the time to start looking for better investment targets elsewhere.

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Dominic Basulto has positions in Bitcoin, Cardano, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Cardano, Ethereum, and Solana. The Motley Fool has a disclosure policy.

Ethereum Dropped More Than 30% in February. Is It Worth Buying the Dip? was originally published by The Motley Fool