Ethereum is one of crypto’s most respected projects and the attached coin. Ether is one that all crypto investors should have in their portfolios. What separates Ethereum from other projects like Bitcoin is that this goal is to support decentralized applications and not merely allow people to make transactions. This affects the price action of Ether and requires people to do a bit more research than simply looking at its price on the charts. Let’s take a look at some investment tips that will allow you to be more successful when trading Ether.
1. Learn what Ethereum is truly About
The first thing you have to understand is what Ethereum is exactly. Ethereum is a blockchain network that hosts a variety of applications. The real goal of Ethereum is to build a global supercomputer that anyone can develop for and host projects on.
The Ethereum network hosts everything from games to payment processors, to all sorts of different applications. It is also, interestingly, the number one blockchain for altcoins. Yes, most altcoins on the market are hosted on the Ethereum blockchain. This means that the success of a coin or a project hosted on the platform could eventually benefit it. This is why you need to learn about the Ethereum ecosystem in detail and look at more than just what’s going on with the coin specifically.
2. Don’t Neglect Current and Historical Price Action
With that being said, you have to know that the value of Ethereum is still highly influenced by speculation since Ethereum is traded over the open market and that the governance board tries to interfere with its supply as little as possible.
This means that you still have to look at it as a somewhat speculative asset until the governance board decides to press action to restrict or expand the supply. Checking the historical price action for the coin will tell you when could be the best time to get in and identify support lines. ETH was around $1200 at the time of writing, as you can see on https://www.okx.com/markets/prices/ethereum-eth.
ETH is the lowest it has been for a while. But we’re clearly seeing support here and if you’re familiar with the historical price action for the coin, all signs seem to point to either it taking off again or stabilizing at this price point.
This makes ETH a very solid investment in the short term that could quickly appreciate over time. Its solid governance and intrinsic value also play in its favor as it can help solidify its floor price.
3. Look at What’s Going on in the NFT Markets
Ethereum is also the world’s number one blockchain for NFTs, and what affects NFT markets will influence ETH. This means that while some coins could be struggling, coins like ETH could still be going strong because of the heavy demand on the NFT markets. And when we look at the direction in which these markets are heading, this could mean very good news for ETH.
4. Look at the Competition
You should know, however, that Ethereum is not the only blockchain in its genre and that others are slowly creeping up. Solana, for instance, is beginning to grow in popularity for NFT minters and could really change the game.
Solana can perform transactions much faster than Ethereum and at a lower cost. It also has a proof-of-stake system that uses a lot less energy. Solana has been marketing itself as an eco-friendly network, which could win it some points in the future too.
So you must know what’s going on in the utility coin sector before you invest in ETH. While none of these competing blockchains have a chance at overtaking Ethereum anytime soon, they can still influence its price and their moves should inform your decision.
5. Learn about Updates
You should know that Ethereum is constantly working to improve its network, however, and has made its blockchain very adaptable. If an issue arises with Ethereum, the direction team will usually come up with a solution very fast, and the way these solutions are viewed by the public will have a direct influence on their price.
Ethereum recently announced that it will move to a new staking protocol that will allow people to easily remove staked coins from their blockchain. That change is huge since this could bring people who were reluctant to stake on the network because of how difficult it was to move assets.
Ethereum is also working to make its blockchain more eco-friendly. This could ingratiate it in the eyes of the public and boost its popularity among eco-conscious NFT buyers and minters.
6. Look at Changes in Governance
It would also be a good idea to keep an eye on what’s going on with the board of directors at ETH. Unlike bitcoin, Ethereum has a real board of directors and their names are made public. So you have to see Ethereum more like a corporation than a decentralized project governed by owners.
The opinion the community has of the people on that board of directors will have an influence on the discussions made around the coin and eventually its price. So if you hear that there is some shuffling going on at the upper levels you should find out who is leaving and why and who’s going to replace them. Learn about their background, and how respected they are, and pay special attention to the previous projects they worked on and how successful they are.
7. Be Ready to Deal with Ups and Downs
At the end of the day, it’s very difficult to tell in which direction the price of Ether will go even if it has solid governance. And their non-interference policy means that the coin is still very subject to wild changes.
While the price of the coins seems to be stabilizing, you need to understand that crypto is one of the most volatile classes of assets on the planet and that the prices can move wildly in any direction at any given time. This is not necessarily a bad thing, but you have to be ready to “hold” as they say, and don’t fall to panic selling.
These are all tips that will allow you to invest in Ethereum safely and with minimal risk. The most important part is to understand the technology behind it and always stay abreast of the most recent changes in governance and policy.