The Promise and Peril of Ethereum, Part II

The cryptocurrency has generated massive gains at times, but extreme volatility will likely rule it out for many conventional investors.

Amy C. Arnott 26 July, 2021 | 4:38AM
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Ethereum coin

In my last article, I covered some of the basics of Ethereum for investors curious about the cryptocurrency space. This article will focus on ether (the official name for the Ethereum protocol’s native currency) as an investment asset.

Ether is so volatile that you could argue (and crypto aficionados probably will) that it doesn’t really fit into a traditional portfolio analysis framework. It’s more of a speculative play on the long-term shift toward digital money and an ongoing revolution in the financial technology landscape. Even so, investors tempted to make a bet on ether should proceed with caution and keep in mind that even small doses of ether can dramatically change a portfolio’s risk profile.

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Amy C. Arnott  Amy C. Arnott, CFA, is director of securities analysis for Morningstar.

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