wETH price prediction - Should one Invest?

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Investors have started to widen their horizons considerably when it comes to finding and investing in the best altcoins available. Ethereum however; while a large market cap crypto, remains one of the most sought-after options in the space. This shouldn’t come as a surprise, since the Ethereum Network is undoubtedly one of the largest and most used blockchains in the entire space currently. But that is when Ethereum investors start wondering- How about parking funds into wETH?

wETH or Wrapped Ether has been gaining traction as an alternative to holding Ether, the original crypto token by the Ethereum Network. But with multiple other altcoins available in the industry, why is wETH(WETH) a good investment and how can it be used? Moreover, as a cryptocurrency, where might its price head in the upcoming months?

To know all this, it is vital to understand what the cryptocurrency is precisely first.

What is wETH(WETH)?

It is a known fact that the ERC-20 standard is what a majority of altcoins in the industry are based on. They use it for transactions, and a majority of decentralized exchanges also support the same mechanism. The flexibility and transparency of ERC-20 set it apart from multiple other options available in the industry.

However, there is one major problem when investors wish to transfer or exchange their Ether(ETH) tokens for fiat or other cryptos. Ether being a project that was launched way before the ERC-20 standard, unfortunately, doesn’t support the same. So, in order to solve these problems, the developers came up with WETH or Wrapped Ethereum, which essentially makes it possible for ETH holders to exchange their tokens for other altcoins easily without losing a substantial amount of money.

Wrapped tokens address interoperability problems that the majority of blockchains experience and make token exchange simple. Users cannot often use Avalanche or Ether on the Ethereum network or the Bitcoin blockchain, respectively. By wrapping, underlying coins are tokenized and conform to the token specifications of a certain blockchain, enabling their use on that network. And since ETH itself does not identify as a token that utilizes the ERC-20 standard of Ethereum, wETH becomes its top alternative.

While WETH is an ERC-20 token, it cannot be used for paying network fees on the Ethereum Blockchain, unlike ETH. But, the token can be used to fund staking or investment options available across multiple Decentralized Applications.

One can also use WETH to buy or sell through auctions on supported marketplaces like Opensea. Undoubtedly, sending ETH to a smart contract or provider is vital to wrap ETH. However, there is one factor that requires the token to be locked while the WETH is in use. This factor is that wETH is ideally pegged to the price of ETH to a 1:1 ratio. Thus, once the token has been converted back to ETH, the wETH used before is instantly burned and removed from circulation.

Price Prediction of wETH(WETH)

As mentioned above, WETH is essentially a token which shall feature the same price as Ethereum almost every time. There may be very slight irregularities in terms of price. However, these can only be extremely small price differences caused due to the delay in burn or similar network issues. Hence, predicting the price of WETH is the same as speculating the upcoming movement for the ETH token.

At the time of writing, WETH is trading at around $1,560 after a steep drop earlier today when it was within the $1,650 range. It has seen a decent spike in volume of more than 9%, despite the drop in prices. The market cap of WETH is more than $1.8 billion, which has also been moving downward at the moment.

With the market movement indicating an overall bullish scenario, there is no doubt that wETH may be due for some serious gains, as ETH can be expected to continue its uptrend in the shorter timeframe as well. Unless there is any major market catalyst that affects the price of top altcoins negatively, WETH can spike to reach the $1,600 range again within the next couple of days. By the end of March, the token may see considerable growth, putting it in the $1,900 price level.

However, the price of WETH cannot simply be considered to stay the same as ETH forever. In case of hacks, or some unexpected exploit that affects the burning mechanism, it is likely that the token value may tank, causing thousands of investors to lose their funds. While this may be an unlikely situation given the reputation of the companies backing it, such an incident remains a possibility.

Conclusion

The price of wETH follows ETH, which ultimately makes it an excellent token to invest in. Naturally, the risk factor that was mentioned above remains, but it can be an excellent idea to convert ETH into WETH for utilizing the crypto to its fully potential. Since WETH is a more enhanced utility token which acts as an ideal alternative to ETH, parking funds or converting any existing ETH to the wrapped version can be a wise idea.

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