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

Trading with the second largest cryptocurrency giant may seem impossible to manage, but it’s not that complicated. If you have the right strategy in place, everything will go smoothly.

Since the Ethereum merger is happening, traders are looking forward to coming up with their tactics to make the most of it. Ethereum is a cryptocurrency that evolved rapidly and is the second largest token on the market today. Furthermore, it is incredibly volatile, which makes it even more desired by investors and traders. Volatility should not be perceived as a disadvantage; on the contrary, it can bring you substantial gains if you know how to exploit it.

Both beginners and veteran traders are interested in Ethereum, which shouldn’t come as a surprise. It has a lot of advantages that you definitely won’t want to miss out on, so let’s delve into the meaning of Ethereum and what is the best strategy to trade the king of this cryptocurrency.

Why Ethereum?

You may be wondering, “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 allows developers to create and distribute dApps (decentralized applications), which makes it comparable to a programmable Bitcoin. The infinite possibilities offered 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), the native currency of Ethereum, is one of the most liquid digital tokens right now. This means it can be converted smoothly, without drastic price swings in the background. Unlike illiquid cryptocurrencies, Ethereum takes a relatively short time to convert to fiat money, even when trading based on a scalping strategy.

Furthermore, Ether opens the door to opportunities for investors who are looking forward to buying cryptocurrencies based on the ERC20 model, as these coins can only be purchased with ETH. In the future, they could be a true long-term investment, so if you already own significant amounts of ether, you may also want to try your luck with these assets.

What determines the price of Ethereum

Like most cryptocurrencies out there, Ethereum is also volatile. The factors that determine its actual price are various, but some of the most important are:

  • Market sentiment
  • Whales: People who hold huge amounts of cryptocurrencies
  • Regulations
  • competition
  • Supply
  • Ethereum 2.0 staking

How to buy Ethereum

Ethereum has caught your attention and now you want to get your hands on it? If you have already bought other cryptocurrencies, you should know the necessary steps. If not, that’s fine, nothing complicated. The first and most important step is to choose a cryptocurrency exchange and then open an account. Most exchanges should provide access to Ethereum as it is the second largest cryptocurrency in the world, but still make sure your chosen platform does this before opening an account. In addition, it is essential to confirm that the exchange conforms to your preferences regarding the form of payment. You can also opt for a broker, but buying Ethereum through an exchange is safer and less complicated.

After taking this step, you just need to fund your account and buy the desired shares. Hence, it would be better to transfer your ETH coins to a wallet as it is essential to reduce the likelihood of losing them due to a hack. There are two types of crypto wallets – hot and cold – and the difference between them lies in their level of security. Therefore, cold wallets are hardware wallets disconnected from the internet, unlike hot wallets, which makes them the most secure cryptographic storage options.

Solid strategies for trading Ethereum

Given the high volatility of ETHs, you need to have a solid strategy if you want to touch the skies with this cryptocurrency.

The most profitable Ethereum trading tactics include:

Range trading

Did you just learn how to buy Ethereum? Great! It’s time to trade it. You may want to start with a range strategy, as many traders consider it successful. This tactic involves determining a range in which to buy or sell in a short amount of time. Price action is also expected to spend around 80% 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 a set period, you will trade the cryptocurrency and stop when the shares are traded in this range.

However, this strategy can’t work wonders if you don’t take your cryptocurrency research seriously. Before jumping to trade in a range, it would be wise to check the ETH price chart several times and notice the price movements over the past two weeks and months.

Moving average trading

The moving average (MA) strategy is perhaps the most popular tactic when it comes to trading Ethereum. It is based on a technical indicator capable of calculating the average price of ETH over a given period. Then, divide the total with the help of vital price data. The result is the average price of the asset, which is permanently recalculated based on the most recent data. This strategy is particularly useful for determining the direction of a trend. It is much easier to trade Ethereum when you have a clearer idea of ​​when its price will go up or down. Of course, this isn’t a foolproof way to beat volatility, as the cryptocurrency world is so unpredictable, but it’s definitely worth a try.

Trade CSR

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 soon occur, while an oversold market defines a potential for price rebound. For example, when the RSI reads 20, the market is oversold and when the RSI reads 70 or more, Ethereum is most likely overbought.

Trading Ethereum isn’t that challenging if you use a solid strategy. What’s important to understand is that you should definitely not jump into trading ETH or any other crypto without a well-defined plan.

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