Is Ethereum the Best Cryptocurrency to Buy Under $4,000?

Today Ethereum (CRYPTO: ETH) is priced at about $3,100 per coin, well below its highs of about $4,800 from earlier this year. That price comes just as the network was poised to ship its Fusaka upgrade earlier this week, and as spot Ethereum exchange-traded funds (ETFs) in the U.S. continue to pull in institutional capital.

Do those strengths, among others, make Ethereum the single best cryptocurrency to buy while it's under $4,000 today, or is there a better option?

Image source: Getty Images.

This network is (still) attacking the pain points that kept people away

Perhaps the biggest argument in favor of buying Ethereum at any price is that when you buy Ethereum, you're buying exposure to the single biggest and most important platform for decentralized finance (DeFi), real-world asset tokenization, and smart contract finance. Despite this year's volatility, Ethereum still hosts the largest pool of total value locked (TVL) into DeFi of any chain, with $65.6 billion.

Fusaka, the chain's newest update, is designed to reinforce that position by making the network's gas fees cheaper for users and more scalable in real usage for decentralized app developers and operators. In particular, Layer-2 (L2) rollup networks are expected to see their transaction costs fall by roughly 40% to 60%, which should help them to take on some additional traffic and relieve even more congestion on the main Ethereum network. Fusaka also adds a mechanism that makes fees less likely to surge during busy periods. Taken together, these structural changes could make Ethereum's perennial bad habit of meteoric fee spikes during periods of heavy network load a thing of the past, which could in turn make its user experience a lot less frustrating.

But if you are thinking of buying Ethereum at $3,100 on the expectation that Fusaka will instantly turn it into a low-fee paradise like Solana, you are setting yourself up for disappointment. If it's anything like past updates, including the Pectra package launched earlier this year, improvements to gas fee economics will be incremental and will still leave the chain with dramatically higher fees than some of its competitors.

Is there a better investment?

So is Ethereum the best cryptocurrency under $4,000?

If you want a single growth-oriented crypto investment centered around exposure to the growth of DeFi and/or smart contract finance, the only real competitor to Ethereum is Solana. Solana is faster and cheaper to use, but its DeFi segment is far smaller with only $8.7 billion in TVL. And considering that capital tends to beget inflows of more capital, it's presently hard to say that Solana is clearly a better option based on the above criteria.

But if you're starting a new crypto portfolio from zero, and you're not too concerned about which drivers the upside is going to come from, Bitcoin is probably the better core holding for you. Ethereum has many more moving parts, many more competitive threats, and much more technology risk compared to Bitcoin. But buying Ethereum is still a reasonable second position for investors who already own some Bitcoin and who are comfortable taking on more complexity in exchange for potential extra upside.

In practice, that means Ethereum under $4,000 is somewhat attractive to purchase, but only if you size your position appropriately (which means for now, keeping it on the small side) and are prepared to hold through another full cycle of upgrades, ecosystem development, and a lot of competitive jostling along the way. If you can do that, the odds look favorable that today's price will eventually look cheap in hindsight.

Alex Carchidi has positions in Bitcoin, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.