While Bitcoin (BTC) is the top cryptocurrency based on the value of its coins in circulation, Ethereum (ETH) doesn’t skimp on gaining ground and trust. With a market capitalization of over $25 billion, ETH is the second leading form of digital currency backed by several big-name companies, including Google, Facebook, Samsung, and Amazon.
So far, ETH continues to be a profitable investment for novice and pro traders alike and a clever investment opportunity in the decentralized finance ecosystem that won’t go away anytime soon. In this guide, we’ll look at the basics of blockchain and some leading trading strategies and factors that drive ETH prices. Here’s what you need to know.
What is Ethereum and how does it work?
Ethereum is a blockchain network that enables anyone to develop self-executing smart contracts which can be used to build DApps (decentralized applications). Created in 2015, ETH is one of the world’s top three cryptocurrencies. It operates on a decentralized computer network or distributed ledges, also known as a blockchain, which tracks and manages the currency. You can think of a blockchain as a processor that runs receipts for every transaction that’s ever taken place in the cryptocurrency. Basically, a field of servers that verify transactions and ensure the integrity of data.
The idea of a decentralized network is what lures people into buying ETH. For example, you can make transactions without the need for a central intermediary such as a bank, which means the currency is almost autonomous. You can send money or buy and sell goods nearly anonymously, even if the transaction is publicly available on the blockchain.
To use the Ethereum blockchain, an investment tracking app to manage your portfolio and see your profits or losses for your position in the blockchain is necessary, you can find one here https://delta.app/en.
Trading Ethereum: what drives prices?
Understanding the events that have helped Ethereum grow in the past few years can improve your trading techniques. You should be able to interpret charts and data, and spot trends in order to increase your chances of executing a successful trade. Trading is no rocket since you know your numbers and don’t act with your feelings.
Here’s what drives ETH prices up and down:
- Tech upgrades – the latest features in the blockchain can boost prices
- Hacks – ETH has been prone to attacks in the past, hurting trust
- Supply – Unlike Bitcoin, Ethereum has no limits on its max cap
- Adoption – Big-name companies use ETH infrastructure, improving visibility
- Defi – Demand for ETH is growing as more people start to acknowledge the importance of decentralized finance
- Competition- Different blockchains claim to offer more advanced features than ETH
Buying ETH isn’t as easy as buying stocks or mutual funds. Digital currencies like Ethereum can’t be traded on major exchanges like the New York Stock Exchange, which means you will need to create an account in a dedicated crypto exchange. These platforms will allow you to exchange fiat currencies like dollars – for digital currencies like Bitcoin, Shiba Inu or Ethereum. Though many trading platforms get complex, most offer a seamless, user-friendly interface for novice traders. However, before choosing an exchange platform, make sure it offers a crypto wallet so that you can pocket your investments safely.
Note that your cryptocurrency can be traded or transferred between multiple crypto exchanges or digital wallets. In order to store them in a private wallet, you will have to transfer them from the exchange’s wallet to your private one.
Unlike stocks and mutual funds which are limited by market hours, digital currencies like ETH work entirely differently: because they run in a decentralized system, you can buy and sell them anytime you want.
To buy Ethereum, log in to your trading platform of choice, select its ticker symbol – ETH – in your account’s buy menu and add the amount you want to buy. Here’s more info on how to buy and store Ethereum.
Typically, trading strategies in crypto tend to focus on short-term fluctuations in the market. However, most investment strategies rely massively on buying digital currencies when they’re cheap, storing them for a long time, and then selling them when they can be sold for a higher price.
If you’ve just entered the crypto craze, we recommend you avoid riskier short-term trades. While you can make a lot of money on them, there’s a good chance of losing a ton of money. So, unless you have some level of expertise and good insight into what the market is going to do, you should abstain from short-term trading.
Holding your Ethereum for a long time, on the other hand, tends to be the safe option. Rumour even has it that currencies like ETH will increase in value over the long term.
Educate yourself about the market
Research is important before you enter into trading positions. Guides from specialists and tweets from analysts can be exceedingly helpful as you try to determine which way the market is heading. Just make sure you choose relevant sources.
Find a system: Stick to It
Work your trading strategies in advance. See what system better suits your current situation and whatnot. Choose a goal and a profit to aim at. A trader must be wary of allowing emotions to take over. That’s especially normal wherever and whenever there is money at stake.
Win the Game to Win the Money
To make significant profits from trading crypto, a trader must first understand the system and focus less on the wins. First, you should learn the game and how to avoid losses.
And finally, remember to trade responsibly and never to buy more than you can afford to lose.