Could Ethereum Make You a Millionaire in 2023? | The Motley Fool (2024)

Crypto may be in a slump right now, but there's a silver lining.

One of the best ways to make a lot of money in the stock market is to buy during the low points, then simply wait for your investments to recover. By investing in the right places, you could see lucrative returns during the next upswing.

Ethereum (ETH -2.21%) is currently down around 68% from its peak in late 2021, which could make right now a fantastic opportunity to buy the dip. But could it make you a millionaire this year? Here's what you need to know.

Will Ethereum recover in 2023?

The short answer: Nobody knows for certain. Crypto is still a speculative investment, so there are no guarantees that this industry will even exist years or decades from now.

That said, Ethereum remains one of the strongest players in the field. It's the second most popular crypto behind Bitcoin, and with a market cap of around $202 billion, Ethereum makes up a significant portion of the $1 trillion crypto sector as a whole.

Ethereum also has a few distinct advantages that could help it succeed over time:

• Smart contracts: A smart contract is a self-executing contract that's built on a blockchain, and they have the potential to revolutionize a variety of industries -- particularly when it comes to decentralized finance (DeFi).
• NFTs: Ethereum is the most widely used platform for NFT marketplaces. While NFTs aren't as popular as they were in recent years, they still have niche followings.
• The metaverse: Ethereum is also one of the most popular blockchains for metaverse projects. Major applications like The Sandbox and Decentraland -- which are leading the way in expanding the metaverse -- are built on Ethereum's blockchain.
• Other cryptocurrencies: Finally, Ethereum also hosts other cryptocurrencies on its network, including big names like Shiba Inu and Polygon. If the next breakout star is hosted on its blockchain, Ethereum will benefit from it.

In other words, Ethereum is well-diversified within the crypto world. If any areas of crypto thrive -- whether it's NFTs, DeFi, the metaverse, or some other cryptocurrency -- Ethereum may be poised for serious growth.

How much can you earn with Ethereum?

As with any cryptocurrency, there's no way to know precisely how Ethereum will perform throughout 2023. Its price could continue to fall throughout the year, or it could rebound significantly.

It's wise, then, to keep a long-term outlook when investing in crypto. The short term could be rough, especially if we haven't seen the worst of this downturn yet. But Ethereum has faced worse in the past. And if history shows us anything, it's that riding out the storm can be incredibly profitable.

For example, back in 2018, Ethereum's price fell by a staggering 94% throughout the year. But if you invested at its lowest point, you would have earned returns of roughly 657% over the following two years alone. Within three years, nearly 4,500%.

Ethereum Price data by YCharts

In other words, if you had invested $1,000 in Ethereum at the end of 2018, you'd have nearly $46,000 by the end of 2021.

Of course, 2020 and 2021 were exceptional years for crypto, and there are no guarantees we'll ever see short-term growth like that again. But with all of Ethereum's potential, many experts have high hopes for its long-term returns.

There are risks to consider, too, such as the speculative nature of the crypto market and Ethereum's constant struggle with slow transaction times and high gas fees. Before you buy, make sure you're willing to take on a high-risk investment, and consider whether the potential rewards outweigh those risks.

Despite its drawbacks, though, Ethereum still has plenty of long-term potential. While it may not make you a millionaire in the coming months, by staying invested for the long haul, it could potentially be a lucrative investment.