Despite the inflation-powered downswing in 2022, investing markets are on a sustained roll. If you put $1,000 into an S&P 500 (SNPINDEX: ^GSPC) index fund four years ago, you'd have $2,167 today. The halving of Bitcoin (CRYPTO: BTC) rewards in May 2020 led to another cycle of price gains and moderation, punctuated with the approval of exchange-traded funds (ETFs) reflecting spot-price Bitcoin values three months ago. Hence, $1,000 of Bitcoin has grown to $10,690 over the same four-year span.

But neither Bitcoin nor the stock market could hold a candle to Ethereum (CRYPTO: ETH). Putting $1,000 into the leading smart contract currency in April 2020, you'd have a cool $26,800 in your digital wallet by now. The cryptocurrency is now worth $3,430 per coin, up from $1,800 a year ago and $133 in early April, 2020.

But past performance is not a guarantee of future results. Does Ethereum have any game-changing moves up its sleeve, comparable to Bitcoin's next 50% cut of mining rewards? Is this digital asset likely to continue its market-beating surge in 2024 and beyond?

The answer to these two crucial questions is "yes" and "I wouldn't be surprised."

Read on to see what Ethereum's developer community is up to next, and what investors should expect from this crypto veteran in the near future.

From Bitcoin to Ethereum, ETFs broaden their crypto horizons

First, that initial batch of 11 spot Bitcoin ETFs arguably opened the floodgates for other types of cryptocurrency funds. Many of the investing firms in January's approval round have already filed applications to the Securities and Exchange Commission (SEC), aiming to introduce Ethereum-based ETFs as soon as possible.

Some of the potential Ethereum ETF sponsors aren't in a hurry, though. For example, Bitwise chief investment officer Matt Hougan recently gave Ethereum ETF approvals a 50% chance in May 2024 -- but he might actually prefer a delay to December.

You see, market makers and investors are still wrapping their heads around the brand-new Bitcoin ETFs. Launching another type of big-name cryptocurrency ETF into this buzzing market could be counterproductive.

"It's just hard to get people to focus past Bitcoin at this point from professional investors," Hougan said in a Forbes interview last weekend. "TradFi is still digesting bitcoin and if you give [traditional finance] time to get comfortable with bitcoin and crypto, they will be ready for the next thing. But if you shove it down their throat in May, I'm not sure they will be."

In other words, the company behind the Bitwise Bitcoin ETF (NYSEMKT: BITB) expects Wall Street to be hungry for Ethereum ETFs once the Bitcoin furor dies down. As such, Bitwise filed for an Ethereum ETF approval last Friday, biding its time while doing homework on Ethereum's long-term prospects.

So the market trends you see around Bitcoin these days should repeat for Ethereum at some point. The timing of the approvals may make a difference, at least initially. But once the two largest cryptocurrencies have gone through the growing pains of this new investing route, the long-term effects should be the same -- a more robust asset class with wider access to investors who can't or won't buy cryptocurrencies directly.

In particular, the expected influx of deep-pocketed institutional investors could add game-changing tailwinds for both Bitcoin and Ethereum. I just don't know whether we'll see these micro-dramas play out in 2024, 2025, or perhaps even later.

Ethereum's technical tune-up

ETF approvals are underway, but their timing and exact details are in the hands of slow-moving regulators. The Ethereum community has more control over another part of the cryptocurrency's price catalysts: technical improvements to the blockchain network's operating code.

One important upgrade took effect on March 13. The so-called Dencun update introduced shard blob transactions, which makes easily processed bundles out of unrelated Ethereum transactions. The big idea is to speed up processing and lower transaction fees, taking a series of smaller steps toward a more effective network.

These steps will continue in 2024, followed by a more abrupt technical shift thereafter.

Ethereum co-founder Vitalik Buterin has outlined the next development phase, nicknamed "The Purge." In a blog post last month, Buterin explained how cleaning out a bunch of obsolete security functions will provide more space for transaction data in each Ethereum contract. As always, this process will be slow and steady with the final cleanup scheduled "a few years down the line."

So there are significant platform changes en route to Ethereum's operating platform. Some steps are coming up soon and others will take a long time. The important takeaway is that Ethereum is evolving to meet the requirements of a more hectic cryptocurrency market. The community is especially interested in making smart contracts smarter, cheaper, and more secure in order to keep up with challenges from alternative smart contract coins such as Avalanche and Solana.

Where are Ethereum's killer apps?

And that brings be to a third class of potential catalysts. Ethereum wouldn't need a faster and sleeker transaction system if the demand for smart contracts weren't on the rise. The combination of wider public awareness and incoming technical improvements should result in more interest from app developers, leading up to the first "killer apps" in simmering fields like decentralized finance and Web3 tools.

The precise timing of these improvements is up in the air, but important Ethereum backers like Vitalik Buterin will do their best to move the Ethereum community forward. If you build it, the killer apps and mass-market success stories will come.

Can these catalysts drive Ethereum prices all the way to $10,000 by the end of this year? Anything is possible but I wouldn't make time-limited bets on it. It's better to build a diversified portfolio of robust cryptocurrencies, stocks, and other asset types, and let the overall value of that collection rise at its own pace. Investing is a marathon, not a sprint -- and crypto investors are also better served by patient endurance than by throwing value darts at the calendar.

So I would say that Ethereum is poised to grow in value for years to come, and I do expect the price to rise in 2024. I just can't promise that it will break the $10,000 barrier by the holidays. Patience is a digital virtue, dear reader.

Should you invest $1,000 in Ethereum right now?

Before you buy stock in Ethereum, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Ethereum wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of April 1, 2024

Anders Bylund has positions in Bitcoin, Bitwise Bitcoin ETF Trust, Cardano, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Cardano, Ethereum, and Solana. The Motley Fool has a disclosure policy.

Will Ethereum Ride the Crypto Bull and Reach $10,000 in 2024? was originally published by The Motley Fool