The golden rules of investing in Ethereum for a productive 2023
2022 might not have been the best year for crypto investing, but it brought to light the cryptocurrencies with the best chances to thrive once the market enters the bull phase. Bear markets wipe out the digital coins that lack utility, which could only be beneficial for investors because it filters the projects that are worth attention for them. This bear market has triggered attention towards Ethereum, which completed the transition from the proof-of-work to the proof-of-stake protocol at the end of September and provided investors with the opportunity to add an environmentally friendly coin to their portfolios.
Due to well-established cryptocurrencies like Ethereum and Bitcoin, exchange platforms continued to register plenty of action over 2022. And according to predictions, seasoned investors will continue to purchase digital coins to diversify their portfolios and prepare for the bull market.
If you plan to invest in Ethereum in the following months, make sure to research before because there’s a catch to buying the altcoin. Each digital coin requires different strategies, and you should follow some golden rules to have a prosperous 2023.
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Is now the ideal time to buy Ethereum?
Suppose you’re interested in the crypto sector, you probably are aware of the latest market trends. For investing in Ethereum, the last couple of months have been neutral to bearish, and crypto experts think prices will stay the same, with a small chance for the altcoin to fall. Therefore, Ethereum is a good long-term investment for the following years and a bullish cryptocurrency overall due to the blockchain’s several utilities.
Central bank hiking, rising inflation, and the increased likelihood of global inflation could trigger a downfall of the crypto market. However, even in the current context, Ethereum performs well and has maintained its value quite stable.
Since its Merge, Ethereum has registered a steady evolution, even if it didn’t experience a boost in Ethereum price usd, as some investors predicted.
The golden rules of investing in Ethereum
Account for volatility
Crypto experts believe that Ethereum is about to register a massive pump due to its upgrade and multiple utilities. And this trend could cause a lot of volatility in the market in 2023 when investors start cashing out their investments.
Pump-and-dump schemes have always been popular in the crypto industry, and specialists think we’ll witness some extended cooldown and consolidation of the coin in the following months. However, this is something you should worry about, especially if you rely on the market’s fluctuations to make a profit.
Do not ride the hype
Only because you’re up to date with everything happening in the crypto market you should refrain from allowing news and rumours to impact your investment strategy. You most likely know the havoc Elon Musk, and his tweets have caused over the years. If you’re an investor looking to add Ethereum to their portfolio to make a profit, you shouldn’t ride the hype but make decisions based on data.
Crypto hype won’t take you far in 2023 because everyone is fixed on the cryptocurrencies’ utility before the buzz around them.
Only invest the money you afford to lose
When you see predictions that Ethereum could increase in value, the temptation is to spend any available cent into the altcoin, hoping you’ll make a big gain. What’s the problem with this? You could easily love all your money because the crypto market is quite volatile, and it’s challenging to predict its direction. When you invest only the money, you are comfortable losing; you limit the risk of financial instability if Ethereum goes sideways.
Buying Ethereum and other cryptocurrencies is risky. Yes, there’s a high chance the altcoin could revolutionise how you manage your finances and become a widely accepted currency. But it may also remain a digital coin you can use for limited instances. Ethereum is one of the most successful cryptocurrency projects in the market, but many others have failed, and nothing can guarantee the sector won’t collapse one day.
Keep an eye on the key events in the industry
Staying informed is crucial when investing in cryptocurrencies because global events, regulatory scenarios, and technological improvements play a more significant role than the buzz around the market.
Expect several key market movers to surface in the following months. Here are the most important subjects you should look for:
– Bitcoin finding a new home (Bitcoin is Ethereum’s main competitor)
– Organisations delving into the Metaverse
– The growth of NFTs
– The evolution of the new sustainable Ethereum ecosystem
– Upcoming regulations
Think long term
An effective way to survive the market’s volatility is to invest in Ethereum with a 10-year or longer mindset. It’s pretty challenging to time the market through a short term in the bear phase, and you risk losing money this way. Ethereum is a crypto project with strong leadership and several utilities that could perform well in the following years.
We know it’s difficult to think long-term when it comes to the crypto market because the industry is still in its early days, and you have plenty to learn about it. But adopting this approach can prevent you from making emotional decisions.
Diversify your portfolio
While Ethereum is a great cryptocurrency in your portfolio, diversification comes with several advantages. Experts recommend putting a small amount of your portfolio into Ethereum and the rest into other assets. Exactly how much depends on your tolerance for risk and belief in the altcoin. Suppose you’re decades away from retiring, and your situation allows it; you afford more exposure to Ethereum because you have time to recover if things go wrong.
However, remember that it’s best to diversify your portfolio with other digital coins like Bitcoin because it’s the most established crypto and has a great chance of surviving long term. Consider a mix of digital assets depending on which you find suitable for your investment style. Establish what your priorities are and extend your areas of knowledge.