Ethereum (ETH) crashes 26% in 24 hours

Ethereum (ETH) has always been the second biggest cryptocurrency in the market, behind Bitcoin.

It’s still in second place after its price plunged alongside Bitcoin’s. Ethereum has fallen by a staggering 26% over the past 24 hours.

The fall means the price is currently sitting at US$614.79, which is a huge decline compared to its all-time high of around US$1,400 just under a month ago.

The fall in price means that Ethereum’s market capitalisation (the number of Ethereum multiplied by price) is now sitting at just under US$60 billion. Over US$4 billion was traded in Ethereum over the past day, clearly people just want to get whatever price they could and leave.

Does this mean that Ethereum is now a screaming buy?

I don’t think it does. If Ramsay Health Care Limited (ASX: RHC) or Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) dropped by 50% in a month you could analyse what their balance sheets are roughly worth compared to the market capitalisation, or calculate what multiple the businesses were trading their operating cashflows or a whole host of other valuation techniques.

Cryptocurrencies have no underlying value. There are no cashflows, profits or revenues being generated like most businesses and properties. Gold has been an accepted store of wealth for thousands of years, with steady growth in value.

Ethereum could just as easily be worth US$500, US$50 or US$5. It is only worth what someone else is willing to pay for it, which is getting less every day.

Foolish takeaway

Cryptocurrency values are being smashed for various reasons, particularly because Asian governments and western banks want them gone. I’m not sure if the cryptocurrency market will ever truly recover, it will take many months if it is to go up again.

I think serious investors are much better off buying growing businesses like these.

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Motley Fool contributor Tristan Harrison owns shares of Ramsay Health Care Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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