Exploring Ethereum: how to buy it, volatility factors, and top-rate strategies

Trading the second crypto giant may seem impossible to handle, but it is not that complicated. If you have the right strategy in place, everything will go smoothly.

Since the Ethereum Merge is happening, traders look forward to crafting their tactics to get the most out of it. Ethereum is a cryptocurrency that has evolved rapidly, and today it is the second largest token on the market. Besides, it is incredibly volatile, which makes it even more desired among investors and traders. Volatility should not be perceived as a disadvantage; on the contrary, it can bring you considerable gains if you know how to leverage it.

Newbies and veteran traders alike are interested in Ethereum, which should come as no surprise. It has a bunch of benefits you surely do not want to miss, so let us dig deeper into what Ethereum means and what is the best strategy to trade this crypto’s king.

Why Ethereum?

You may wonder, “Why trade Ethereum when there are over 5,000 cryptocurrencies out there waiting to be discovered?”. And indeed, there are. But Ethereum has something that no other cryptocurrency has: it lets developers create and deploy dApps (decentralized applications), which makes it comparable to a programmable Bitcoin. The endless possibilities provided by the Ethereum platform make it one of the most sought-after blockchains.

Another factor that makes Ethereum so special is its liquidity. In fact, Ether (ETH), Ethereum’s native currency, is one of the most liquid digital tokens at this moment. This means it can be converted hassle-free, without drastic price swings in the background. As opposed to illiquid cryptocurrencies, Ethereum takes a relatively short time before converting it into fiat money, even when trading based on a scalping strategy.

Moreover, Ether opens doors of opportunities for investors looking forward to buying cryptocurrencies based on the ERC20 template, as these coins can only be purchased with ETH. In the future, they might be a real long-term investment, so if you already own significant amounts of ethers, you may also want to try your luck with these assets.

What drives the Ethereum price

Like most cryptocurrencies out there, Ethereum is also volatile. Factors determining its actual price are various, but some of the most important are:

  • Market sentiment
  • Whales – people that hold huge amounts of crypto
  • Regulations
  • Competition
  • Supply
  • Ethereum 2.0 staking

How to purchase Ethereum

Did Ethereum grab your attention, and now you want to get your hands on it? If you have bought other cryptocurrencies before, you should know the steps involved. If not, it is OK – nothing complicated. The first and foremost step is to choose a crypto exchange and then open an account. Most exchanges should provide access to Ethereum since it is the world’s second-largest cryptocurrency, but still, ensure the chosen platform does so before opening an account. Also, confirming that the exchange complies with your preferences regarding the form of payment is vital. You can also opt for a broker, but buying Ethereum through an exchange is safer and less complicated.

After you have taken this step, you only need to fund your account and buy the desired stocks. Then, it would be best to transfer your ETH coins to a wallet as it is essential to reduce the likelihood of losing them to a hack. There are two types of crypto wallets – hot and cold – and the difference between them lies in their level of security. Thus, cold wallets are hardware wallets disconnected from the Internet, unlike hot wallets, which makes them the safest crypto storage options.

Robust strategies for trading Ethereum

Given the high ETH volatility, you must have a sound strategy if you want to touch the skies with this crypto.

The most profitable Ethereum trading tactics include:

Range trading

Have you just learned how to buy Ethereum? Great! It is time to trade it. You may want to start with a range strategy, as many traders consider it successful. This tactic implies determining a range where you would purchase or sell in a short span. It is even projected that the price action spends approximately 80 percent of its time trading in a range, which makes this strategy even more worth trying. So, if the Ethereum price range reaches the estimated value during an established period, you will trade the crypto and stop when the stock trades in this range any longer.

Nonetheless, this strategy cannot do wonders if you do not take your crypto research seriously. Before jumping to trade in a range, it would be wise to check the ETH price chart multiple times and notice the price movements in the last couple of weeks and months.

Moving average trading

The moving average (MA) strategy is perhaps the most popular tactic when it comes to Ethereum trading. It is based on a technical indicator that can calculate the average price of ETH over a certain period. Then, it divides the total with the help of vital price data. The result is the asset’s average price, which is permanently recalculated according to the latest data points. This strategy proves especially helpful when determining a trend’s direction. It is much easier to trade Ethereum when having a clearer idea of when its price is going to move up or down. Of course, this is not a surefire way to beat volatility, as the crypto world is such an unpredictable one, but it is definitely a worth-trying one.

RSI trading

Traders often use the relative strength index (RSI) to calculate the overbought or oversold conditions of Ethereum. When a market is overbought, a reversal may occur soon, while an oversold market defines a price bounce potential. For example, when the RSI reads 20, the market is oversold, and when the RSI indicates 70 or more, Ethereum is most probably overbought.

Trading Ethereum is not that challenging if you make use of a robust strategy. What is important to understand is that you should by no means jump to trade ETH or any other crypto without a well-defined plan.

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Source: Financial Content

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