As of January 16, the Ethereum (ETH -0.39%) cryptocurrency has gained 37% in a year. It was a wild ride with coin prices ranging from $2,220 to $4,070. All told, the second largest name in crypto barely managed to outperform a stellar showing by the S&P 500 stock market index.

Ethereum is worth $3,333 per coin this morning. I love alliteration and repeating patterns, but this cryptocurrency won't stay at this appealing price for long. Well, it already moved since I wrote down the current price -- it's hard to keep up with these volatile digital assets.

But none of that matters if you're thinking about becoming an Ethereum owner. Is the smart contracts platform poised to move higher, or did it peak 10 months ago?

A quick and easy forecast

Ethereum has been worth more than $3,500 several times before. It reached that level on at least 7 occasions in 2024, briefly peeking above the $4,000 point in May and December. Those spikes didn't even set a record -- Ethereum's all-time high was a brief visit to $4,892 in November 2021.

A simplistic review of the cryptocurrency's price charts suggests that it follows the four-year cycle of Bitcoin (BTC 1.79%) halving events. Ethereum prices tend to soar about a year after each halving, skyrocket for another year or so, and then fall back into a crypto winter. On that time scale, Ethereum and other cryptos are in the early innings of a fresh bull market.

There are many issues with this chart-glancing analysis, though.

  • As with the stock market, Ethereum's past performance are no guarantee of future results.
  • Every halving cycle is different, and this one is no exception. Several price-boosting events pushed Ethereum's price higher last year, perhaps undermining any short-term gains in 2025.
  • I'm looking at a fairly short charting history here. It's only the third crypto cycle since Ethereum was introduced in 2014, and maybe I shouldn't draw conclusions based on this limited data pool.
  • And that brings me back to the first point -- chart squiggles from the past can't really tell you what's next. Technical analysis is neither an art nor a science, but more of a gamble. I don't recommend making investment decisions on this flimsy basis.

A more robust analysis

Let's forget about the price chart for a minute. What's actually going on in the Ethereum project, and what could it mean for owners, users, and investors in the long run?

Both Bitcoin and Ethereum are essentially encrypted transaction ledgers, managed on publicly available computer networks. But they serve fundamentally different purposes.

Bitcoin offers a digital coin that can be used for payments, and its value should rise over time due to rising demand and a strictly limited supply.

Ethereum is the functional coin of a massive, global computer. Smart contracts embedded in its transactions are executed automatically, performing a wide range of digital functions based on real-world data. This functionality is the core of decentralized finance (DeFi) systems, moving financial processes out of banks and into your phone. Here, the coin's value doesn't rely on tight supply-side limitations.

It's all about the smart contracts finding many use cases, millions of daily users, and a massive volume of actual Ethereum transactions. Each transaction makes something happen in somebody's blockchain wallet, or in a decentralized game, and so on -- and the transactions incur gas fees. Some of the fees are "burned," or permanently removed from the open market. The rest goes to people who stake their Ethereum coins, making their assets available to process transactions. Importantly, you can pay extra gas fees to execute your smart contracts faster, which should result in significant price increases when Ethereum-based apps go mainstream.

Moreover, Ethereum is always upgrading its software. Upcoming improvements include tighter security, cheaper transaction fees, and the technical foundation for game-changing upgrades later on. These boosts will be required in order to stave off challenges from younger and faster smart contract platforms. It would be a shame to build a worldwide market for decentralized apps, only to see Solana (SOL 4.65%) and Cardano (ADA 6.21%) reap the long-term benefits of your work.

What's missing from this overview is a timetable for decentralized finance apps taking off. With or without assistance from Bitcoin's tenor-dictating price trends, Ethereum's real value won't be known until you see the first killer apps of the DeFi and Web3 movements.

Why Ethereum looks ready to run

It's hard to pin a proper value on a digital transaction-tracking network, especially in a rapidly changing market with several credible alternatives.

That said, I'm convinced that DeFi and Web3 will revolutionize personal finance around the globe. Disrupting the enormous banking industry is a big ask, but it may be inevitable. The financial systems you use every day in 2025 have been around for decades or even centuries, and there are better tools available these days.

And despite a plethora of challengers, Ethereum remains the leader of the smart contracts pack. Many signs point to a healthy user community. More than half of all crypto value locked into app development projects belongs to the Ethereum market. There are roughly 300 million active Ethereum addresses today, up from 130 million four years ago.

The network effect of that exploding user group should boost Ethereum's value over time. According to Metcalfe's Law, the value of any network grows as the square of the number of people involved. This value formula originally applied to telecommunications networks in the 1980s but has also been applied to the internet, social networks, airport networks, and financial services.

On that note, I expect Ethereum's real-world value to soar as people embrace its fast and inexpensive solutions to age-old financial problems. I can't promise that $3,333 is the best buy-in price ever; still, I see a bright future for this crypto community in the long run, and the coin should build value over the years.

Ethereum may or may not skyrocket in 2025, and it doesn't really matter. I suggest holding this cryptocurrency for the long haul.