Want to make a profit on Ethereum trading? It’s simple. All you need to do is buy coins when the Ethereum price is low and sell them when the price is high. Put the difference in your pocket – that’s the profit. These instructions seem simple, but making a profit isn’t always that easy – especially in the world of cryptocurrency. Market volatility sends the ETH price up and down like a pogo stick, rising and falling dramatically with no warning and no obvious cause. Last week’s 100 € purchase may be worth 200 € today – or 50 €. That’s why profits are so hard to make in spot trading, where investors make money by timing the market – buying and selling according to their predictions about the rapidly changing Ethereum exchange rate. ETH value rises and falls according to market dynamics, speculation about international regulatory changes, tweets from billionaires and entertainers, and many other factors. Timing the market amid all these influences is extremely difficult. That’s why almost all day traders lose money. A Special Case Launched in 2015, Ethereum has long held a position as the second-largest cryptocurrency in terms of market capitalization. Only Bitcoin is worth more. In 2021, Ethereum monthly transaction volume surpassed Bitcoin volume for the first time, leading some observers to predict that Ethereum would eventually displace Bitcoin as the biggest and most important cryptocurrency. Ethereum has risen to its high rank in the crypto market because it is not a direct competitor to Bitcoin. BTC was invented to serve as a general-purpose electronic currency, a replacement or complement to government-issued fiat currencies. Ethereum was created with a different goal in mind. Ethereum is only incidentally a cryptocurrency. The main purpose of Ethereum is to serve as a platform for running blockchain-based applications. It is a sort of operating system for the decentralized peer-to-peer world. The key to Ethereum’s success is its support of smart contracts – executable software that is stored on the blockchain. This has made Ethereum the platform of choice for most blockchain-based distributed apps – especially in the decentralized finance market. Most DeFi dApps are built on Ethereum. Ethereum is also the host blockchain for many crypto tokens that are associated with dApps. And it is the blockchain of choice for the new – but rapidly growing – market for nonfungible tokens, or NFTs. It’s no wonder Ethereum has secured the #2 spot in the cryptocurrency market. Storm Clouds on the Horizon With its dominance of the dApp, DeFi, and NFT markets, you might expect Ethereum’s share of the total crypto market to be rising. But in fact, it has fallen throughout 2022. Inherent weaknesses of the Ethereum blockchain are part of the reason. In its current form, the Ethereum network can confirm only about 30 transactions per second. That’s better than Bitcoin, which confirms only 7 TPS. But it is inadequate for the demands of a worldwide financial platform. The Visa credit/debit card network routinely handles 1,700 TPS and is said to be capable of processing 24,000 TPS. For Ethereum to live up to its potential, it must solve the transaction bottleneck. The development team behind Ethereum has laid out a roadmap to “Ethereum 2.0,” a new release that should process a theoretical maximum of 100,000 TPS. Ethereum 2.0 was originally scheduled for release in 2019. Developers are now hoping to release the new blockchain by the end of 2023. Another disadvantage of the Ethereum network is its high transaction costs. Every transaction on the Ethereum blockchain must be paid for with “gas” payments, which have skyrocketed along with the number of transactions competing for validation. So although many dApps, DeFI applications, and NFTs are introduced every day, technical shortcomings of the Ethereum network have created an opportunity for competing blockchains from Solana, Cardano, Polkadot, Polygon, Avalanche, and others. The result is that Ethereum has gradually lost market share during 2022. Investing in Ethereum Industry observers continue to believe that Ethereum has a bright future in the long term. In the meantime, the Ethereum exchange rate rises and falls dramatically in the short term. This market volatility makes Ethereum spot trading tricky. But it takes place within the context of an overall long-term rising trend. Of course, this is true of many cryptocurrencies. Values tend to rise and fall along with Bitcoin’s, but the long-term trend is upward. Learning From the Past What if you had purchased Ethereum a month ago or a week ago? If you had purchased 100 € worth of ETH, what would you have now? You don’t have to wonder. The performs the calculations based on data that is refreshed around the clock. The calculator can tell you exactly how much your 100 € investment would be worth today using actual historical data. Kriptomat what-if calculator In fact, the calculator can display results for any of the 350+ cryptocurrencies on sale at Kriptomat. The calculator demonstrates that despite the short-term volatility, crypto has generated eye-opening returns for long-term investors. One good way to take advantage of long-term upward trends is to use the feature, which lets you set a schedule of regular purchases on a weekly, bi-weekly, or monthly basis. For the price of a daily cup of Starbucks, you can slowly but steadily build up your crypto portfolio in support of long-term goals like retirement, purchasing property, or paying for expensive university education. Kriptomat Recurring Buy The Bottom Line The world is full of impoverished day traders who can testify that there is nothing easy about predicting high and low prices in the crypto market. The factors influencing the Ethereum exchange rate are too numerous and obscure to track. This volatility has made life difficult for day traders, but its effects are small compared to long-term Ethereum price trends. There is no such thing as a “sure thing” in crypto investing, but many happy Ethereum owners have found success by thinking of their crypto holdings as a long-term investment. Disclaimer: Nothing in this article constitutes professional investment advice. Please do your own thorough research before making any investment decisions.
