Ethereum (CRYPTO: ETH) is the second-largest cryptocurrency, with a market cap of about $480 billion (as of Oct. 21). Even though cryptocurrencies that explode tend to be smaller coins, Ethereum made a big jump this year, going from under $1,400 in April to nearly $5,000 in August.
It has pulled back 22% since then as the entire crypto market has been in a slump. But long term, Ethereum could be one of the top cryptocurrency investments. Here’s the biggest tailwind in its favor.
One of the most compelling uses for blockchain technology is as an alternative to the traditional financial system. Developers can use smart contracts, which are programs built on a blockchain, to create a variety of decentralized financial services. These are known as decentralized finance (DeFi). Here are a few examples of what’s possible:
DeFi has been growing quickly and gaining mainstream acceptance in 2025. The U.S. passed the Genius Act, which regulates stablecoins, in July, and the stablecoin market has grown from $205 billion at the start of the year to $308 billion now. Over that same period, the value of tokenized RWAs went from $16 billion to $34 billion.
Stablecoins, tokenized RWAs, and other DeFi services all need a blockchain platform to operate on. While there are many smart-contract blockchains that can fill this role, Ethereum is the most popular choice, and it’s not a close race.
The total value locked (TVL) into DeFi applications is $151 billion, according to DefiLlama. Nearly two-thirds (63%) of that, some $86 billion, is on Ethereum. Ethereum also has 54% of the stablecoin market. As the first blockchain with smart contract capabilities, and the largest, Ethereum has built a massive lead on the competition.
Expectations are high for DeFi. Fortune Business Insights forecasts that the market will grow by 27% annually through 2032. British bank Standard Chartered has projected that the stablecoin market will be worth $2 trillion by 2028.
Cryptocurrency is unpredictable, and it’s certainly possible that these predictions will turn out to be overly optimistic. That said, DeFi is an exciting development that seems to be gaining traction. More money is going into DeFi applications, and some of the top financial companies have launched their own stablecoin projects, including JPMorgan Chase and PayPal. For those stablecoin projects, JPMorgan Chase and PayPal both chose Ethereum.
Ethereum will continue to have its ups and downs, and it’s a high-risk asset. That said, I think its dominance in DeFi makes it one of the best cryptocurrencies to own. As always, keep your own risk tolerance in mind.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Lyle Daly has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum, JPMorgan Chase, and PayPal. The Motley Fool recommends Standard Chartered Plc and recommends the following options: long January 2027 $42.50 calls on PayPal and short December 2025 $75 calls on PayPal. The Motley Fool has a disclosure policy.
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